Prepare a condensed income statement


Atlantic Airlines operated both an airline and several motels located near airports. During the year just ended, all motel operations were discontinued and the following operating results were reported:

Atlantic Airlines operated both an airline and several motels located near airports. During the year just ended, all motel operations were discontinued and the following operating results were reported:                






Continuing operations (airline):



Net sales
$ 53,000,000
Costs and expenses (including income taxes on continuing operations)

42,700,000
Other data:



Operating income from motels (net of income tax)

810,000
Gain on sale of motels (net of income tax)

4,956,000
Extraordinary loss (net of income tax benefit)

3,360,000

The extraordinary loss resulted from the destruction of an airliner by an earthquake. Atlantic Airlines had 1,000,000 shares of capital stock outstanding throughout the year.

a.

Prepare a condensed income statement, including proper presentation of the discontinued motel operations and the extraordinary loss. Include all appropriate earnings per share figures. (Input all amounts as positive values except losses which should be indicated by minus sign. Round your per share amount to 2 decimal places. Omit the "$" sign in your response.)

Assume that you expect the profitability of Atlantic Airlines operations to decline by 5 percent next year, and the profitability of the motels to decline by 10 percent. What is your estimate of the company's net earnings per share next year? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

 

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Accounting Basics: Prepare a condensed income statement
Reference No:- TGS0691684

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