Question

At December 31, 2019. Vaughn Corporation had the following stock outstanding 10% cumulative preferred stock, $100 par, 109,101 shares Common stock, $5 par, 4,021,360 shares $10,910,100 20,106,800 During 2020, Vaughn did not issue any additional common stock. The following also occurred during 2020. Income from continuing operations before taxes $23,507,100 Discontinued operations (loss before taxes) $3,330,000 Preferred dividends declared $1,091,010 Common dividends declared $2.082,400 Effective tax rate 35 % Compute earnings per share data as it should appear in the 2020 income statement of Vaughn Corporation (Round answers to 2 decimal places, eg. 1.48.) Earnings Per Share

Answer 1

Vaughn Company
Computation of Earnings per share For the year ended 31st December, 2020
Particulars	Amount ($)	Amount ($)
Income from Continuing operations before tax	2,35,07,100
Less: Income tax expense @ 35%	82,27,485
Income from Continuing operations After tax		1,52,79,615
Discontinued operations:
Loss on Discontinued operation before tax	33,30,000
Less: Tax savings/ benefits (33,30,000@35% = 11,65,500 benefit)	11,65,500
Net loss on Discontinued operations		-21,64,500
Net Income		1,31,15,115
Preference Dividend		10,91,010
Weighted average common shares outstanding		40,21,360 shares
EPS = (Income - Preference dividend) / Weighted Average common stocks outstanding
Continuing operations ($1,52,79,615 - $10,91,010 / 40,21,360 = 3.53 )		3.53
Discontinued operations ($ -21,64,500 / 40,21,360 = -0.54)		-0.54
Earnings per share		2.99