Jackson Publishing, Inc. (JPI), publishes two newspapers and, until recently, owned a professional baseball team. The baseball team had been losing money for several years and was sold at the end of 2011 to a group of investors who plan to move it to a larger city. Also in 2011, JPI suffered an extraordinary loss when its Raytown printing plant was damaged by a tornado. The damage has since been repaired. A condensed income statement follows:
Net revenueCosts and expensesIncome from continuing operationsDiscontinued operations:Operating loss on baseball teamGain on sale of baseball team Income before extraordinary itemsExtraordinary loss:Tornado damage to Raytown printing plantNet incomeJACKSON PUBLISHING, INC INCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2011⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯$(1,300,000)4,700,000$41,000,00036,500,000$4,500,0003,400,000$7,900,000(600,000)$7,300,000
Instructions
On the basis of this information, answer the following questions. Show any necessary computations and explain your reasoning.
c. Given your assumptions in part b, but given that JPI did sell the baseball team in 2011, what would you forecast as the company's estimated net income for 2012?