Question

Windsor 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 $1,778,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,547,000. In both years, the company incurred a 11% interest expense on $2,298,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $626,000 on February 2021. The company uses a 20% effective tax rate for income taxes. The capital structure of Windsor Corporation on June 1, 2019, consisted of 969,000 shares of common stock outstanding and 20,000 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. Windsor sold an additional 490,000 shares of the common stock at $20 per share. Windsor distributed a 20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020, Windsor was able to sell an additional 804,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years. Identify whether the capital structure at Windsor Corporation is a simple or complex capital structure. Simple Capital Structure
Can you check if my answers are good? and answer the comparative Income Statement. Thank you.

Answer 1

Answer shares = 9691 nel toochi 4 months Page No 0 O The Capital structure at Windso em courporation is a Pasimple capital aboucline @ Weighted average number of shares On June 1, 3019 common stock outstanding weighted number of shares - 969000 x con e l estad) 323000 On Oct 1, 2019 common stock sold coeighted no. of shares +(969000 + 490,000) xin 9 May = 1459000 x 942667 On May 31, 2020 „Common stock outstanding weighted no. of shares 8 P Oct 1, 2017 2020 8 months = 323000 + 942667 - 1295664 1. May 31, 2020, weighted average no.of shares = 1295667

( June , 2020 to] 6 months On June 1, 2020.common stock outofanding corighted noi of shares - (969000 + 490,000) x dec 1, 2020 - 1459000 y 429500 On deci, a oso common sfocs sold weighted no. of shares G (dec 8, 2020 to = (969000 + 496000 + 804000) xorn | Haust, 2021 Lomonths) = 2263000 x = 1131500 on May 31, 20 21 common stock outstanding weighted no. of shares .= 729500 + 1131500 - 1861000 May 31,2001, weighted average no of shares = 1861000 WE 0 May 31, 2020 @ May 31, 2011 weighted average no. of shares 1925667 1861000

© 2021 Page No ③ Comparative income statement Particular 2020 Income from operations $1,478,000 $2,544,000 kom from discontinue operations ($626000) Karnings bebore Intereste, tax $1,448,000 $1,901,000 Interest expense ($ 252780) († 250480) Profit before tax $1,535,220 $1,668,220 Tax @ 20% ($ 305044) ($ 333644) Profit after tax $1820146 $1,334,546 dividend on 64 prebered stock ($60,000) ($60,000) Profit available for commonstock $1,160,176 $1,044,576 weighted average no. of charies (295667 1861000 Karrings per share $0.90 $0.68 Interest expense = 2298000 X 11% = $952,480 dividend on 6% prebevred stock = 20,000shares x $ 50 X 6%. e $ 60,000 => 1505 220 X 209; = $305044 1668220% 20%. = $333644