Question

5 15 points Catena's Marketing Company has the following adjusted trial balance at the end of the current year. Cash dividends of $630 were declared at the end of the year, and 530 additional shares of common stock ($0.10 par value per share) were issued at the end of the year for $2,120 in cash (for a total at the end of the year of 850 shares). These effects are included below: Catena's Marketing Company Adjusted Trial Balance End of the current Year Debit Credit Cash $ 1,670 Accounts receivable 2,320 Interest receivable 110 Prepaid insurance 1,730 Long-term notes receivable 2.970 Equipment 16,000 Accumulated depreciation $ 2.850 Accounts payable 2,310 Dividends payable 630 Accrued expenses payable 3,890 Income taxes payable 2,520 Unearned rent revenue 440 Common Stock (850 shares) Additional paid-in capital 3,535 4,130 Retained earnings Sales revenue 36,950 Interest revenue 120 Rent revenue 720 Wages expense 18,000 Depreciation expense 1,770 410 Utilities expense Insurance expense 770 Rent expense 9,700 Income tax expense 2,730 Total $ 58,180 $58,180

Answer 1

Solution:- As per the information given,Net income is absolutely correct.

Calculation of Earnings per Share

Earnings per share = Net Income / Average share Outstanding

Earning per share = $4,410 / 585

Earnings per share = $7.54

Calculation of Average Share outstanding

Additional shares = 530 shares

End shares = 850 shares

Beginning Balance = 850 - 530 = 320 shares

Average shares = (320 + 850) / 2

Average Shares = 585 shares

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