Response to the following problem:
Wave Runner, Inc., produces and distributes equipment for sailboats. On the basis of the following data for the current fiscal year ended June 30, 2006, prepare a multiple-step income statement for Wave Runner, including an analysis of earnings per share.
There were 10,000 shares of $150 par common stock outstanding throughout the year.
Administrative expenses $ 92,400
Cost of merchandise sold 431,900
Cumulative effect on prior years of changing to a
different depreciation method (decrease in income) 60,000
Gain on condemnation of land (extraordinary item) 43,000
Income tax reduction applicable to change in depreciation method 24,000
Income tax applicable to gain on condemnation of land 17,200
Income tax reduction applicable to loss from discontinued operations 36,000
Income tax applicable to ordinary income 58,800
Loss on discontinued operations 90,000
Loss from fixed asset impairment 100,000
Restructuring charge 80,000
Sales 976,400
Selling expenses 125,100