Managerial accounting condensed income statements
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... $55,120,000
Costs and expenses(including income taxes in continuing operations).. 43,320,000
other data:
Operating income from motels (net of income taxes)... 864,000
Gain on sales of motels (net 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 through the year.
Instructions:
a. prepare a condensed income statement, including proper presentation of the discontinued motel operations and the extrodiinary loss. Include all appropriate earnings per share figures.
b. 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?
