Exercise 4-13 At December 31, 2016, Larkspur Corporation had the following stock

Question

Exercise 4-13 At December 31, 2016, Larkspur Corporation had the following stock outstanding 10% cumulative preferred stock, $100 par, 109,120 shares $10,912,000 Common stock, $5 par, 4,027,680 shares 20,138,400 During 2017, Larkspur did not issue any additional common stock. The following also occurred during 2017 Income from continuing operations before taxes Discontinued operations (loss before taxes) Preferred dividends declared Common dividends declared Effective tax rate $23,756,300 $3,403,600 $1,091,200 $2,047,000 35 % Compute earnings per share data as it should appear in the 2017 income statement of Larkspur Corporation. (Round answers to 2 decimal places, e.g. 1.48.) Earnings Per Share LINK TO TEXT VIDEO: SIMILAR EXERCISE

Explanation / Answer

Solution:

Larkspur Corporation Income Statement 31-Dec-16 Particulars Amount Net Income: Income from continuing operation before income tax $23,756,300.00 Income Tax (35%) $8,314,705.00 Income from continuing operation $15,441,595.00 Discontinued operations Losses before taxes $3,403,600.00 Less: Income tax (35%) $1,191,260.00 $2,212,340.00 Net Income $13,229,255.00 Preferred dividend declared $1,091,200.00 Weighted average common share outstanding 4027680 Earning per share: Income from continuing operation
($15,441,595 - $1,091,200)/4027680 $3.56 Discontinued operation, net of tax
($2,212,340/4027680) -$0.55 Net Income
($13,229,255 - $1,091,200) / 4027680 $3.01

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