n January 1, 2012, Bailey Industries had stock outstanding as follows. To acquir

Question

n January 1, 2012, Bailey Industries had stock outstanding as follows.

To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional 192,000 common shares. The acquisitions took place as shown below.

On May 14, 2012, Bailey realized a $114,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.

On December 31, 2012, Bailey recorded net income of $384,000 before tax and exclusive of the gain.

Assuming a 44% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2012. Assume that the expropriation is extraordinary. (Round answer to 2 decimal places, e.g. $2.55.)

6% Cumulative preferred stock, $105 par value,
   issued and outstanding 11,500 shares

$1,207,500 Common stock, $12 par value, issued and
   outstanding 192,000 shares
2,304,000

Explanation / Answer

Insurance gain Dr. 11400

Income statement Cr. 11400

Income statement Dr. 168960

Tax Cr. 168960

Dividend expense Dr. 72450

Dividend paid Cr. 72450

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