The stockholders’ equity section of Buffalo Corporation appears below as of Dece
ID: 2335454 • Letter: T
Question
The stockholders’ equity section of Buffalo Corporation appears below as of December 31, 2017.
$4,607,100
10,414,700
20,757,500
$134,744,000
36,960,000
171,704,000
$207,483,300
Net income for 2017 reflects a total effective tax rate of 34%. Included in the net income figure is a loss of $11,347,700 (before tax) as a result of a non-recurring major casualty. Preferred stock dividends of $368,568 were declared and paid in 2017. Dividends of $1,014,300 were declared and paid to common stockholders in 2017.
Compute earnings per share data as it should appear on the income statement of Buffalo Corporation. (Round answers to 2 decimal places, e.g. 1.48.)
$4,607,100
Common stock, $1.00 par, authorized and issued 10,414,700 shares10,414,700
Additional paid-in capital20,757,500
Retained earnings$134,744,000
Net income36,960,000
171,704,000
$207,483,300
Explanation / Answer
Computation of net income: Net income after tax $36,960,000 Net income before tax (36,960,000 / 0.66) 56,000,000 Add: Back major casualty loss 11,347,700 Income from operations 67,347,700 Income tax (67,347,700 x 34%) 22,898,218 Income before extraordinary item 44,449,482 Extraordinary item: Casualty loss $11,347,700 Less applicable income tax reduction 3,858,218 7,489,482 Net income $36,960,000 Net income $36,960,000 Less provision for preferred dividends (4,607,100 x 8%) 368,568 Income available for common 36,591,432 Common shares 10,414,700 Earnings per shares $3,51 Income statement presentation per share of common stock: Income before extraordinary item (44,449,482 - 368,568) / 10,414,700 $4.23 Extraordinary item ($7,489,482 / 10,414,700 ) 0.72 Net Income $3.51
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