The following are partial income statement account balances taken from the December 31, 2021, year-end trial balance of White and Sons, Inc.: restructuring costs, $300,000; interest revenue, $40,000; before-tax loss on discontinued operations, $400,000; and loss on sale of investments, $50,000. Income tax expense has not yet been recorded. The income tax rate is 25%. Prepare the lower portion of the 2021 income statement beginning with $800,000 income from continuing operations before income taxes. Include appropriate EPS disclosures. The company had 100,000 shares of common stock outstanding throughout the year.

White and Sons, Inc.

The Lower Portion of the 2021 Income Statement of White and Sons, Inc.

Income from continuing operations   $800,000

Interest revenue                                      40,000

Loss on discontinued operations,       (400,000)

Loss on sale of investments                  (50,000)

Restructuring costs,                             (300,000)

Income before tax                                 $90,000

Income tax (25%)                                    (22,500)

Net income                                            $67,500

Explanation:

a) Data and Calculations:

Restructuring costs, $300,000

Interest revenue, $40,000

Before-tax loss on discontinued operations, $400,000

Loss on sale of investments, $50,000

Income tax rate = 25%

Income from continuing operations = $800,000

b) The restructuring costs of $300,000 are non-recurring costs incurred during the reorganization of White and Sons.  They are reported as non-operating expenses.  Similarly, realized gain or loss on the sale of an investment is reported in the income statement as a separate line item after continuing operations.

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