Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2018 2017
Sales$4,400,000$3,500,000
Cost of goods sold 2,860,000 2,000,000
Administrative expenses 800,000 675,000
Selling expenses 360,000 312,000
Interest revenue 150,000 140,000
Interest expense 200,000 200,000
Loss 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.)

REED COMPANY
Comparative Income Statements
For the Years Ended December 31
20182017
Sales revenue$4,000,000$3,000,000
Cost of goods sold2,570,0001,680,000
Gross profit (loss)1,430,0001,320,000
Operating expenses:
Administrative750,000635,000
Selling340,000282,000
Loss from fire damage50,000
Loss from write-down of obsolete inventory35,000
Total operating expenses1,175,000917,000
Operating income255,000403,000
Other income (expense):
Interest revenue150,000140,000
Interest expense(200,000)(200,000)
Total other expenses (net)(50,000)(60,000)
Income from continuing operations before income taxes205,000343,000
Income tax expense82,000137,200
Income from continuing operations123,000205,800
Discontinued operations:
Income (loss) from operations of discontinued component
Income tax benefit (expense)
Income (loss) on discontinued operations
Net income
Earnings per share:
Income from continuing operations$0.41$0.69
Discontinued operations
Net income