Question

E10-14 Effect of Preferred Stock on Earnings per Share LO 10-4 Poison Corporation holds 70 percent of Snake Company's voting common shares but none of its preferred shares. Summary balance sheets for the companies on December 31, 20X1, are as follows: Poison Corporation Snake Company Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Snake Company Total Assets Liabilities and Owners' Equity Accounts Payable Wages Payable Preferred Stock Common Stock ($10 par value) Retained Earnings Total Liabilities and Owners' Equity $ 14,000 39,000 110,000 295,000 (134,000) 123,200 $ 447,200 $ 23,000 49, eee 75,000 210,000 (62,eee) $295,000 $ 63, eee $ 87,200 40, eee 100,000 120,000 100,000 $ 447,200 56,000 100,000 76,000 $295,000 Neither of the preferred issues is convertible. Poison's preferred pays a 9 percent annual dividend and Snake's preferred pays a 10 percent dividend. Snake reported net income of $47000 and paid a total of $22,000 of dividends in 20X1. Poison reported $64,000 of income from its separate operations and paid total dividends of $46,000 in 20X1 Required: Compute 20x1 consolidated EPS Ignore any tax consequences. (Round your answer to 2 decimal places.) Consolidated earnings per share

Answer 1

Basic Earnings Per Share
Operating income of amber corporation		$   64,000.00
Net income of newtop company	$ 47,000.00
Less:Pref dividends	$ (5,600.00)
earnings available to newtop common shareholders		$   41,400.00
Consolidaed net income		$ 105,400.00
Less:income to NCI		$ (12,420.00)
Income to coomon shareholdersof amber corporation		$   92,980.00
Less:Preferred dividends of amber corporation		$   (9,000.00)
earnings available to common shareholders		$   83,980.00
No of shares		$   12,000.00
BEPS		$              7.00