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Chapter 13: Q13SE (page 710)

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.

Short Answer

Expert verified

Report shows Income from continuous operation EPS is $0.93, Discontinued operations EPS is $0.27 and Net Income EPS is $1.21.

Step by step solution

01

Computation

IncomefromContinousOperationPerShare=IncomefromContinousOperation-DividendNumberofShares=$11,468-$4,0008,000=$0.93

DiscontinuedOperationPerShare=GainonDiscontinuedOperationNumberofShares=$2,1968,000=$0.27

NetIncomePerShare=NetIncome-DividendNumberofShares=$13,664-$4,0008,000=$1.21

02

Reporting EPS-

ABC Corporation

Income Statement

Dec 31, 2018

Earnings per share of common stock (8,000 outstanding shares)

Income from continuous operation

$0.93

Discontinued operations

$0.27

Net Income

$1.21

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Most popular questions from this chapter

Computing dividends on preferred and common stock and journalizing

The following elements of stockholders鈥� equity are from the balance sheet of Sneed Marketing Corp. at December 31, 2017:

800,000

Preferred Stock鈥�4%, \(2 Par Value; 80,000 shares

authorized, 55,000 shares issued and outstanding

Paid-In Capital:

\) 110,000

Stockholders鈥� Equity

Common Stock鈥�$0.10 Par Value; 8,750,000 shares

authorized, 8,000,000 shares issued and outstanding

Sneed paid no preferred dividends in 2017.

Requirements

2. Record the journal entries for 2018 assuming that Sneed Marketing Corp. declared the dividends on July 1 for stockholders of record on July 15. Sneed paid the dividends on July 31

Where and how is treasury stock reported on the balance sheet?

Computing price/earnings ratio Refer to the HEB data in Short Exercise S13-17. Assume the market price of HEB鈥檚 common stock is $19.50 per share. Compute HEB鈥檚 price/earnings ratio.

A Identifying sources of equity, stock issuance, and dividends

Voyage Comfort Specialists, Inc. reported the following stockholders鈥� equity on its balance sheet at June 30, 2018:

Preferred Stock鈥�7%, ? Par Value; 625,000 shares

authorized, 280,000 shares issued and outstanding

Paid-In Capital:

\( 1,400,000

1,340,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 2,900,000

Total Paid-In Capital 5,640,000

Retained Earnings 12,000,000

Total Stockholders鈥� Equity \) 17,640,000

Common Stock鈥�$1 Par Value; 3,000,000 shares

authorized, 1,340,000 shares issued and outstanding

Requirements

3. Make two summary journal entries to record issuance of all the Voyage Comfort Specialists鈥� stock for cash. Explanations are not required.

Journalizing treasury stock transactions and reporting stockholders鈥� equity

Southern Amusements Corporation had the following stockholders鈥� equity on

November 30:

Paid-In Capital:

Common Stock鈥擻(5 Par Value; 1,300 sharesauthorized, 250 shares issued and outstanding1,250

Retained Earnings50,000

Total Stockholders鈥� Equity \) 55,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 3,750

Total Paid-In Capital

\(5,000

On December 30, Southern purchased 200 shares of treasury stock at \)15 per share.

Requirements

2. Prepare the stockholders鈥� equity section of the balance sheet at December 31, 2018. Assume the balance in retained earnings is unchanged from November 30.
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