Comparative Statements of Shareholders’ Equity for Locke
Intertechnology Corporation were reported as follows for the fiscal
years ending December 31, 2019, 2020, and 2021.
LOCKE INTERTECHNOLOGY CORPORATION | ||||||||||||||||||||||||||||
Statements of Shareholders' Equity | ||||||||||||||||||||||||||||
For the Years Ended Dec. 31, 2019, 2020, and 2021 | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Preferred Stock, $10 par |
Common Stock, $1 par |
Additional Paid-in Capital |
Retained Earnings |
Total Shareholders' Equity |
||||||||||||||||||||||||
Balance at January 1, 2019 | $ | 55 | $ | 495 | $ | 1,878 | $ | 2,428 | ||||||||||||||||||||
Sale of preferred shares | 10 | 470 | 480 | |||||||||||||||||||||||||
Sale of common shares, 7/1 | 9 | 81 | 90 | |||||||||||||||||||||||||
Cash dividend, preferred | (1 | ) | (1 | ) | ||||||||||||||||||||||||
Cash dividend, common | (16 | ) | (16 | ) | ||||||||||||||||||||||||
Net income | 290 | 290 | ||||||||||||||||||||||||||
Balance at December 31, 2019 | 10 | 64 | 1,046 | 2,151 | 3,271 | |||||||||||||||||||||||
Retirement of common shares, 4/1 | (4 | ) | (36 | ) | (20 | ) | (60 | ) | ||||||||||||||||||||
Cash dividend, preferred | (1 | ) | (1 | ) | ||||||||||||||||||||||||
Cash dividend, common | (20 | ) | (20 | ) | ||||||||||||||||||||||||
3-for-2 split effected in the form of a common stock dividend, 8/12 |
30 | (30 | ) | |||||||||||||||||||||||||
Net income | 380 | 380 | ||||||||||||||||||||||||||
Balance at December 31, 2020 | 10 | 90 | 980 | 2,490 | 3,570 | |||||||||||||||||||||||
10% common stock dividend, 5/1 | 9 | 90 | (99 | ) | ||||||||||||||||||||||||
Sale of common shares, 9/1 | 3 | 31 | 34 | |||||||||||||||||||||||||
Cash dividend, preferred | (2 | ) | (2 | ) | ||||||||||||||||||||||||
Cash dividend, common | (22 | ) | (22 | ) | ||||||||||||||||||||||||
Net income | 412 | 412 | ||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | 10 | $ | 102 | $ | 1,101 | $ | 2,779 | $ | 3,992 | ||||||||||||||||||
Required:
Infer from the statements the events and transactions that affected
Locke Intertechnology Corporation's shareholders' equity and
compute earnings per share as it would have appeared on the income
statements for the years ended December 31, 2019, 2020, and 2021.
No potential common shares were outstanding during any of the
periods shown. (Enter your answers in millions rounded to 1
decimal place (i.e., 5,500,000 should be entered as
5.5).)
Earnings per share (2019) = (net income – preferred dividends)/( shares at Jan. 1 + new shares) = (290-1)/(55+(9*6/12)) = $4.86
Earnings per share (2020) = (net income – preferred dividends)/( shares at Jan. 1 + new shares) = (380-1)/((64*(1.50)-(4*9/12*1.50)) = $4.14
Earnings per share (2021) = (net income – preferred dividends)/( shares at Jan. 1 – retired shares) = (380-1)/((64*(1.50)-(4*9/12*1.50)) = $4.14
Earnings per share (2021) = (net income – preferred dividends)/( shares at Jan. 1 – retired shares) = (412-2)/((90*(1.10)+(3*4/12)) = $4.10
Comparative Statements of Shareholders’ Equity for Locke Intertechnology Corporation were reported as follows for the fiscal...
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