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Formal Income Statement Preparation (Foxworthy Case Study)

The adjusted trial balance of Foxworthy Corporation for the year ended December 31, 2011 reported the following: sales revenue, $22,300,000; cost of goods sold, $14,500,000; selling expenses, $2,300,000; general and administrative expenses, $1,200,000; dividend revenue from investments, $200,000; interest expense, $300,000.

Foxworthy's management has not yet accrued for income taxes. The company's income tax rate is 40% on all items of income or loss.

Two million shares of common stock were outstanding throughout the year.

The company's controller has provided the following information with respect to certain non-recurring transactions that also occurred during the year (all transactions are material in amount):

* Investments classified as available for sale were sold during the year at a loss of $300,000.

* One of the factories was closed during the year. Restructuring costs incurred were $2,000,000.

* During the year, Foxworthy completed the sale of one of its operating divisions that qualifies as a component of the entity. The division had reported operating income of $800,000 in 2011 prior to the sale, and its assets were sold at a loss of $1,800,000.

* In 2011, the company's accountant discovered that depreciation expense in 2010 for the office building was overstated by $300,000.

* One of Foxworthy's manufacturing facilities located in a foreign country was expropriated. A loss of $800,000 was recognized. The event is considered to be unusual and infrequent.

Prepare a formal Income Statement in proper format, including basic earnings per share disclosure for Foxworthy Corporation for the year ended December 31, 2011.

Solution Summary

A formal income statement preparation for Foxworthy Case Study is determined.