Question

please help with last part (earnings per share and return on common stockholders' equity)

The stockholders' equity accounts of Whispering Winds Corp.on January 1, 2022 were as follows. Preferred Stock 7% $100 par noncumulative, 6000 shares authorired) Common Stock (54 stated value, 360,000 shares authorized) Paid in Capital in Excess of Par Value-Preferred Stock Paid-in Capital in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock (6,000 common shares) $360,000 1.200.000 18,000 576.000 825,600 48.000 During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity Feb 1 Issued 6,000 shares of common stock for $36.000 Mar. 20 Purchased 1.200 additional shares of common treasury stock at 57 per share Oct. 1 Declared a 7 cash dividend on preferred stock payable November 1 Nox. 1 Paid the dividend declared on October 1 Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022. Dec 31 Determined that net income for the year was $335.000. Paid the dividend declared on December 1 Your Answer Correct Answer Journally the transactions include entries to count income and dividends to Retained Earnings Record entries in the order displayed in the oblem statement Credit account titles are automa entered. Do not indent manually. If entry is required, select 'No Entry for the accounttities and enter for the amounts Round answers to decimal places, 275 Debit Credit Date Account Tities and Explanation Man. 20 0 Menury Stock O

Answer 1

Computation of Earning per share and Return on Common Shareholdens Equites Ans: Earning pen shane = $ 1.01 per shane (See working note -1) Return on common shareholders Equity = 25.56 7. (see working note-2)

And O Working Computation note -1) and (2) of Earning por shane Earching pen share = net income - Preferred dividende Weighted Avenage Common Shanes outstanding Preferned dividend = $ 360,000 X 77, = $ 25200 Net in come = $335,000 e Weighted average mo number of common shares outstanding : Particulars workings No. of shakee opening balance of 300000 x 12 monty 300.000 12 morted common Shanes on Jan.l.2022 (8 1200 Coo$ 11 months) i Issue of I Gooox 6000 common 5500 72 months Shares on feb.l.2022 305 500 Weighted average number of Shanes outstanding Lore outstanding common shanes)

Earning pen shane : Net income - Preferred dividend Weighted average number of shares outstananding $325,000 ($ 335 000 - $ 25200) 305500 a $ 309.800 305 500 $ 1.01 pon shane Hence, eanning pen share is $ 1.01 pen shane. calculation of -holden's equity : Return on Common shane. Return on common shareholders Equity : net income - Preferred dividend Average common stock x100 ! Avenage common stock Common stock in the I beginning of the year + Comman stock at the end of the year

Average common stock : Common stock as on Jan. 1.2022 to common stock as on Dec 31 2022 ($1200000 + $ 1224000 = ($ 1200 ooot $ 122 4ooo $ 2424 000 2 6 $ 12, 12000 (Average common stock) Return on common shaneholdens Equity: Net income - - Average Prefenned dividend x 100 common stock X 100 ($ 335000 - $ 25,200 ) $ 1212 000 x 100 $ 309800 $ 1212 000 = 25.56