Question

12-2, LO12-5, The following data relate to the operations of Slick Software, Inc, during 2015. Continuing operations: $19,850,000 16,900,000 12.2A Net sales . . .. Costs and expenses (including applicable income tax,) Income a Statement rnings Other data: Operating income during 2015 on segment of the business discontinued near year-end (net of income ta Loss on disposal of discontinued segment (net of income 140,000 tax benefit) Extraordinary loss (net of income tax benefit) Prior period adjustment (increase in 2014 depreciation 550,000 900,000 expense, net of income tax benefit) 350,000 950,000 . .

please help!

Answer 1

SOLUTION:

1) Condensed Income Statement

Net sales       19,850,000     
Costs and expenses (including applicable income taxes)       16,900,000     
Income from continuing operations       2,950,000     
Discontinued operations             
Operating income (net of income tax)   140,000         
Loss on disposal (net of income tax benefit)   -550,000   -410,000     
Income before extraordinary item       2,540,000     
Extraordinary loss (net of income tax benefit)       -900,000     
Net income       1,640,000     
             
Earnings per share             
Earnings from continuing operations       12.25     
Preferred dividends: 80,000 shares * $6.25 = $500,000             
[($2,950,000 - $500,000) / 200,000 shares]             
Loss from discontinued operations        -2.05     
[($410,000 / 200,000 shares)             
Earnings before extraordinary items        10.2     
[($2,540,000 - $500,000 preferred dividends) / 200,000 shares]             
Extraordinary loss ($900,000 / 200,000 shares)       -4.5     
Net earnings       5.7     
[($1,640,000 - $500,000 preferred dividends / 200,000 shares]             

2) Statement of Retained Earnings

Retained earnings, December 31         
As originally reported   7,285,000     
Minus: Adjustment for prior period   -350,000     
As restated   6,935,000     
Net income   1,640,000     
Subtotal   8,575,000     
Cash dividends   -950,000     
Retained earnings, December 31   7,625,000     

3)

Total cash dividends declared   950,000     
Minus: Preferred stock dividend (80,000 shares * $6.25 per share)   500,000     
Cash dividends to common stockholders   450,000     
Number of common shares outstanding   200,000     
Cash dividend per common share ($450,000 / 200,000 shares)   2.25     

4) The single figure for the amount $8.00 for EPS is unfavorable in compared to the previous performance. As it is the only one EPS figure, which need to be compared to the earnings per share from continuing operations, which totalled to $12.25 per share. Slick Software, Inc.’s earnings per share from continuing operations declined $4.25 per share (nearly35%) in this period