Format of an Income Staement and a Statement of Retained Earnings
Shown below are data relating to the operations of Beach, Inc., during 2011.
Continuing operations: |
|
Net sales | $37,400,000 |
Costs and expenses (including applicable income taxes) | 21,500,000 |
Other data: |
|
Operating income during 2011 on segment of the business discontinued near year-end (net of income taxes) | 205,000 |
Loss on disposal of discontinued segment (net of income tax benefit) | 510,000 |
Extraordinary loss (net of income tax benefit) | 930,000 |
Prior period adjustment (increase in 2010 amortization expense, net of income tax benefit) | 310,000 |
Cash dividends declared | 2,000,000 |
Instructions
a. Prepare a condensed income statement for 2011, including earnings per share statistics. Beach, Inc., had 200,000 shares of $1 par value common stock and 100,000 shares of $6, $100 par value preferred stock outstanding throughout the year.
b. Prepare a statement of retained earnings for the year ended December 31,2011. As originally reported, retained earnings at December 31,2010, amounted to $10,700,000.
c. Compute the amount of cash dividend per share of common stock declared by the board of directors for 2011. Assume no dividends in arrears on the preferred stock.
d. Assume that 2012 earnings per share is a single figure and amounts to $75. Assume also that there are no changes in outstanding common or preferred stock in 2012. Do you consider the. $75 earnings per share figure in 2012 to be a favorable or unfavorable statistic in comparison with 2011 performance? Explain.
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