Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 13: 35_E (page 716)

Computing earnings per share

Faccone Academy Surplus had 60,000 shares of common stock and 9,000 shares of 20%, \(15 par value preferred stock outstanding through December 31, 2018. Income from continuing operations for 2018 was \)711,000, and loss on discontinued operations (net of income tax saving) was $36,000.Compute Faccone’s earnings per share for 2018, starting with income from continuing operations. Round to the nearest cent

Short Answer

Expert verified

Earnings per share for 2018 of the company is $11.4

Step by step solution

01

Basic Introduction

PreferredDividend=NumberofShares×PricePerShares×DividendRate=9,000×$15×20%=$27,000

Income from continuous operations: $711,000

Outstanding common shares: 60,000 shares

02

Earnings per share

Earnings Per Share

Income from continuous operations

$711,000

Less: Preferred Dividend

$27,000

a.

$684,000

b. Outstanding common shares

60,000

Earnings Per Share (a/b)

$11.4

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

List three characteristics of a corporation.

Question: Journalizing a large stock dividend

Nelly, Inc. had 320,000 shares of \(2 par value common stock issued and outstanding as of December 15, 2018. The company is authorized to issue 1,300,000 common shares. On December 15, 2018, Nelly declared a 40% stock dividend when the market value for Nelly’s common stock was \)7 per share. The stock was issued on Dec. 30.

Requirements

1. Journalize the declaration and distribution of the stock dividend.

Question: Accounting for the purchase and sale of treasury stock

Discount Furniture, Inc. completed the following treasury stock transactions in 2018:

Dec. 1 Purchased 1,900 shares of the company’s \(1 par value common stock as treasury stock, paying cash of \)5 per share.

15 Sold 200 shares of the treasury stock for cash of \(8 per share.

20 Sold 1,000 shares of the treasury stock for cash of \)1 per share. (Assume the balance in Paid-In Capital from Treasury Stock Transactions on December 20 is $2,400.)

Requirements

2. How will Discount Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2018?

Question - Describing corporation characteristics

Due to recent beef recalls, Southwest Steakhouse is considering incorporating. Bob, the owner, wants to protect his personal assets in the event the restaurant is sued.

Requirements

1. Which advantage of incorporating is most applicable? What are other advantages of organizing as a corporate entity?

Reporting earnings per share

Return to the ABC data in Short Exercise S13-12. ABC had 8,000 shares of common stock outstanding during 2018. ABC declared and paid preferred dividends of $4,000 during 2018.

Show how ABC reports EPS data on its 2018 income statement.
See all solutions

Recommended explanations on Business Studies Textbooks

Business Case Studies

Read Explanation

Business Development

Read Explanation

Corporate Finance

Read Explanation

Nature of Business

Read Explanation

Strategic Analysis

Read Explanation

Strategic Direction

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free