Question

Problem 16-06 (Part Level Submission) Marin Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,741,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,605,000. In both years, the company incurred a 10% interest expense on $2,439,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $591,000 on February 2021. The company uses a 20% effective tax rate for income taxes. The capital structure of Marin Corporation on June 1, 2019, consisted of 957,000 shares of common stock outstanding and 19,600 shares of $50 par value, 6%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants. On October 1, 2019, Marin sold an additional 505,000 shares of the common stock at $20 per share. Marin distributed a 20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020, Marin was able to sell an additional 824,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years.

Answer 1

Answer Page.no May 31, 2020 2021 pociative in D ome Tabement caului end 2020 2021 Particular Income from operation $1741000 $2605000 Interest expense ($243900)(+243900) Income from Continuing operation before tame $ 1497100 $2361100 Income tax at 20% ($.999420) ($ 442220) Income from continuing operation 119 Discontinued operation loss, net of income taxes (472800 Nete income $1194680 $1416080 Earnings per share Income from continuing operation 1 $0.73 $0.84 Discontinued operation lors | Net loss $0.43 Interest expense = 10:7. X 2439000 $ $243900 $ 0.22 $0.62 2011 Discontinued operation loss; net of income taxes = 591000 (100%.-) = 591000 X0:8 3 472800

Page No @ Preberence shares dividend = 196 00 shares X $ 50 por X 64. $58800 to 2020 total och afanding shares = June I to oct 1 + oct 1 to May 3) * (95400oskeres XIoax) + (Cast600 + 50500) xixi = 382800 + 1169600 = 1552400 for 2021 total weighted shanes = (1+54900 x ) + .- ((1+54400+ 824000) x ) - 87+200 + 1289200 :7 2166400 Income from Continuing operation gps 2020. - 1197680 – 58800 0.73 1552400

Page No ③ 2001 e 1888,880 - 58800 2166400 50.84 Discontinued operation 472800 loss EPS = - 2166400 = 0.22 Nel income EPS = 1416080-58800 2166400 1 = 0.62