basic earnings per share simple capital structure the income statement for figno

Question

basic earnings per share simple capital structure

the income statement for fignon co. for the year ended December 31, 2015, reported the following. Income form continuing operations before income taxes $35,000 income taxes $14,000 income from continuing operations $21,000 loss from disposal of segment(net income taxes) (4,200) net income $16,800 compute basic EPS amounts for 2015 under each of the following assunptions (consider each assumption separately) (A) the company has only one class of common stock with 20,000 shares outstanding. (B) the company has shares outstanding as follows: preferred 8% stock, $15 par, cumulative, 5,000 shares: common, $12 par, 20,000 shares. Only the current year's preferred dividends are unpaid (C) Same as (b) except that fignon co. also has preferred 7% stock, $10 par, noncumulative, 6,000 shares, and only $3,000 in dividends on the noncumulative preferred has been declared.

Explanation / Answer

PARTICULARS CASE A CASE B CASE C Income form continuing operations before income taxes 35000 35000 35000 Income taxes 14000 14000 14000 income from continuing operations 21000 21000 21000 loss from disposal of segment 4200 4200 4200 Net Income 16800 16800 16800 Less 8% preferred stock ---- 6000 6000 Less 7% preferred stock ----- ----- 4200 Income available for equity shareholders 16800 10800 6600 No. of sahres 20000 20000 20000 EPS 0.84 0.54 0.33

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