The following data relate to the operations of Slick Software, Inc., during 2007.
Continuing operations: |
|
Net sales | $19,850,000 |
Costs and expenses (including applicable income tax) | 16,900,000 |
Other data: |
|
Operating income during 2007 on segment of the business discontinued near year-end (net of income tax) | 140,000 |
Loss on disposal of discontinued segment (net of income tax benefit) | 550,000 |
Extraordinary loss (net of income tax benefit) | 900,000 |
Prior period adjustment (increase in 2006 depreciation expense, net of income tax benefit) | 350,000 |
Cash dividends declared | 950,000 |
Instructions
a. Prepare a condensed income statement for 2007. including earnings per share figures. Slick Software. Inc., had 200,000 shares of $1 par value common stock and 80,000 shares of $6.25, $100 par value preferred stock outstanding throughout the year.
b. Prepare a statement of retained earnings for the year ended December 31, 2007. As originally reported, retained earnings at December 31, 2006, amounted to $7,285,000.
c. Compute the amount of cash dividend per share of common stock declared by the board of directors for 2007. Assume no dividends in arrears on the preferred stock.
d. Assume that 2008 earnings per share is a single figure and amounts to $8.00. Assume also that there are no changes in outstanding common or preferred stock in 2008. Do you consider the $8.00 earnings per share figure in 2008 lo be a favorable or unfavorable statistic in comparison with 2007 performance? Explain.
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