*Exercise 16-19 A portion of the combined statement of income and retained earni

Question

*Exercise 16-19 A portion of the combined statement of income and retained earnings of Concord Inc. for the current year follows. Income before extraordinary item Loss from discontinued operations, net of applicable income tax (Note 1) Net income Retained earnings at the beginning of the year $15,080,000 1,310,000 13,770,000 82,660,000 96,430,000 Dividends declared: On preferred stock-$6.00 per share $318,000 14,980,000 15,298,000 On common stock-$1.75 per share Retained earnings at the end of the year Note 1. During the year, Concord Inc. suffered a major loss from discontinued operations of $1,310,000 after applicable income tax reduction of $1,230,000. At the end of the current year, Concord Inc. has outstanding 8,450,000 shares of $10 par common stock and 53,000 shares of 6% preferred. On April 1 of the current $81,132,000 year, Concord Inc. issued 1,000,000 shares of common stock for $32 per share to help finance the loss from discontinued operations Compute the earnings per share on common stock for the current year as it should be reported to stockholders. (Round answer to 2 decimal places, eg.$2.55.) Concord Inc. Question Attempts: 0 of 2 used

Explanation / Answer

Answer :- Calculation of earnings per share:-

1. Calculation of Net income available from common stockholders:-

2. Calculation of Weighted Average number of shares outstanding:-

Calculation of EPS on income from extraordinary loss:-

1. 1476200 / 8200000 shares = 1.80 per share

Calculation of EPS on extraordinary loss - Net of loss:-

1. 1310000/8200000 shares = (0.16) per share

Calculation of EPS on Net Income :-

1. 13452000/8200000 shares = $1.64 per share

Income Data:- Income before extraordinary item 15080000 Less:- 6% Dividend on preferred stock (318000) Common stock income before extraordinary item 14762000 Less:- Extraordinary Loss- Net of tax (1310000) Net Income available for common stockholders 13452000

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