Question

On January 1, 2017, Larkspur Industries had stock outstanding as follows. 6% Cumulative preferred stock, $100 par value, issued and outstanding 9,900 shares $990,000 Common stock, $10 par value, issued and outstanding 199,000 shares 1,990,000 To acquire the net assets of three smaller companies, Larkspur authorized the issuance of an additional 160,800 common shares. The acquisitions took place as shown below. Shares Issued Date of Acquisition Company A April 1, 2017 Company B July 1, 2017 Company C October 1, 2017 51,600 80,400 28,800 On May 14, 2017, Larkspur realized a $86,400 (before taxes) insurance gain on discontinued operations. On December 31, 2017, Larkspur recorded income of $309,600 from continuing operations (after tax). Assuming a 50% tax rate, compute the earnings per share data that should appear on the financial statements of Larkspur Industries as of December 31, 2017. (Round answer to 2 decimal places, e.g. $2.55.) Larkspur Industries Income Statement For the Year Ended December 31, 2017 T Income From Continuing Operations 309600 Discontinued Operations Gain, Net of Tax A Net Income / (Loss)

Answer 1

Solution :- Earning per su Shares ning per Share - Net Income Applicable to common Weighted Average Share Outstanding Calculation of Net Income Applicable to common shares Particulars Amount Cin$) Income from continuing operation 309,600 Discontinue operation gain less tan @ 50%. - Net of tax 86,400 43,200 43,200 Net Income 3,52,800 less dividend for preferred stock and Other adjustment (9,90,000 x 6%) 159,400) Net Income Applicable to Common Share 2.93,400

Calculation of Weighted Average share outstanding and weighted average no. of . Common share common share 1.04.2017 1,99,000 1,99,000 X 2/12 - 199,000 Date I No. of 11.04.2017 38,700 51,600 x 9/12 = 51,600 80,400 X 6/12 = 40,200 1.07.2017 80,400 7,200 28,800× 3/12 = 1.10.2017 28,800 2,85,100 Total Shares $2,93,900 $1.03 Earning per share = 2,85,100