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2. Elite Trailer Parks has an operating profit or $200,000. Interest expense for the year was $10,000; preferred dividends pa
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Answer #2

A. Operating profit $200,000
Interest expense (10,000)
Earnings before taxes 190,000
Taxes (61,250)
Earnings after taxes = $128,750
Preferred dividends (18,750)
Available to common stockholders 110,000
Common dividends (30,000)
Increase in retained earnings $80,000

*EPS = 110,000/20,000 = $5.50

**Dividends per share = 30,000/20,000 = $1.50


B. Increase in retained earnings = $80,000

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