Question 1 Cullumber Medical manufactures hospital beds and other institutional

Question

Question 1

Cullumber Medical manufactures hospital beds and other institutional furniture. The company’s comparative balance sheet and income statement for 2015 and 2016 follow.

a) Calculate the earnings per share (average of 485,000 shares outstanding for the year) for 2016. (Round answer to 2 decimal places, e.g. 2.55.)

Cullumber Medical
Comparative Balance Sheet
As of December 31 2016 2015 Assets Current assets   Cash $330,000 $417,450   Accounts receivable, net 1,067,200 776,400   Inventory 742,000 681,000   Other current assets 375,000 247,050 Total current assets 2,514,200 2,121,900 Property, plant, & equipment, net 9,812,390 8,467,400   Total assets $12,326,590 $10,589,300 Liabilities and Stockholders’ Equity Current liabilities $3,102,000 $2,846,100 Long-term debt 3,702,650 3,892,650   Total liabilities 6,804,650 6,738,750 Preferred stock, $5 par value 52,500 52,500 Common stock, $0.25 par value 137,000 103,800 Retained earnings 5,332,440 3,694,250   Total stockholders’ equity 5,521,940 3,850,550   Total liabilities and stockholders’ equity $12,326,590 $10,589,300

Explanation / Answer

Earning per share =(Net income - Preferred dividends )/Average shares outstanding =(2090690-29500)/485000= 4.25

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