The following is an excerpt from a conversation between evan eberhard, the warehouse manager for greenbriar wholesale co., and its accountant, marty hayes. greenbriar operates a large regional warehouse that supplies produce and other grocery products to grocery stores in smaller communities. evan: marty, can you explain what’s going on her with these monthly statements? marty: sure, evan. how can i you? evan: i don’t understand this last-in, first-out inventory procedure. it just doesn’t make sense. marty: well what it means is that we assume that the last goods receive are the first ones sold. so the inventory is made up of the items we purchase first. evan: yes, but that’s my problem. it doesn’t work that way! we always distribute the oldest produce first some of that procedure is perishable! we can’t keep any of it very long or it’ll spoil. marty: evan, you don’t understand. we only assume that the products we distribute are the last one received. we don’t actually have to distribute the goods in this way. evan: i always thought that accounting was supposed to show what really happened. it all sounds like "make believe" to me! why not report what really happens? respond to evans concern.

Selected information about income statement accounts for the reed company is presented below (the company's fiscal year ends on december 31): 2018 2017sales $ 4,400,000 $ 3,500,000cost of goods sold 2,860,000 2,000,000administrative expenses 800,000 675,000selling expenses 360,000 312,000interest revenue 150,000 140,000interest expense 200,000 200,000loss on sale of assets of discontinued component 50,000 —on july 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by gaap. the assets of the component were sold on september 30, 2018, for $50,000 less than their book value. results of operations for the component (included in the above account balances) were as follows: 1/1/18-9/30/18 2017 sales $ 400,000 $ 500,000 cost of goods sold (290,000 ) (320,000 )administrative expenses (50,000 ) (40,000 )selling expenses (20,000 ) (30,000 )operating income before taxes $ 40,000 $ 110,000 in addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts: a fire caused $50,000 in uninsured damages to the main office building. the fire was considered to be an infrequent but not unusual event.inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. the inventory was sold as scrap for $5,000.income taxes have not yet been recorded.required: prepare a multiple-step income statement for the reed company for 2018, showing 2017 information in comparative format, including income taxes computed at 40% and eps disclosures assuming 300,000 shares of common stock. (amounts to be deducted should be indicated with a minus sign. round eps answers to 2 decimal places.)