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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 $56,000,000 Costs and expenses (including income taxes on continuing operations) 40,200,000 Other data: Operating income from motels (net of income tax) 790,000 Gain on sale of motels (net of 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 throughout the year. Instructions a. Prepare a condensed income statement, including proper presentation of the discontinued motel operations and the extraordinary 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? a. ATLANTIC AIRLINES Income Statement For the Year Ended December 31, 20__ Earnings per share of common stock: Earnings from continuing operations $ ___________________ Income from discontinued operations _____________________ Earnings before extraordinary items $ _____________________ Extraordinary loss (3.36) Net earnings $ ________________________ b. Estimated net earnings per share next year: Earnings per share from continuing operations $ ________________ Estimated decrease ( ) Estimated net earnings per share next year $ _____________________

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