Hartzog Corporation\'s most recent balance sheet and income statement appear bel

Question

Hartzog Corporation's most recent balance sheet and income statement appear below: Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) Year 2 Year 1 Assets Current assets: Cash $280 $250 Accounts receivable 460 440 Inventory 230 440 Prepaid expenses 40 40 Total current assets 1,010 1,170 Plant and equipment, net 1,010 1,020 Total assets 2,020 2,190 Liabilities and Stockholder's Equity Current liabilities: Accounts payable $165 $270 Accrued liabilities 20 20 Notes payable, short term 140 180 Total current liabilities 325 470 Bonds payable 200 280 Total liabilities 525 750 Stockholder's equity: Preferred stock, $10 par, 5% 100 300 Common stock, $2 par 700 700 Additional paid-in capital--common stock 190 190 Retained earnings 505 250 Total stockholder's equity 1,495 1,440 Total liabilities and stockholder's equity 2,020 2,190 Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) Sales (all on account) $5,100 Cost of goods sold 3,060 Gross margin 2,040 Selling and administrative expense 1,508 Net operating income 532 Interest expense 75 Net income before taxes 457 Income taxes (30%) 137 Net income 320 Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share. The earnings per share of common stock for Year 2 is closest to: $1.52 $0.90 $1.31 $0.91

Explanation / Answer

Net income = 320 preferred dividends = 5 Available for common = 315 Common stock = (700/2) = 350 EPS 315/350= $0.90

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