Computing EPS and reporting a retained earnings restriction [20-25 min]
The capital structure of Hillstride, Inc., at December 31, 2011, included 26,000 shares of $2 preferred stock and 42,000 shares of common stock. Common stockoutstanding during 2012 totaled 42,000 shares. Income from continuing operationsduring 2012 was $118,000. The company discontinued a segment of the business at again of $28,000 and also had an extraordinary gain of $18,000. The Hillstride boardof directors restricts $97,000 of retained earnings for contingencies. Retained earningsat December 31, 2011, was $97,000, and the company declared preferred dividends of$52,000 during 2012.
Requirements
1. Compute Hillstride’s earnings per share for 2012. Start with income from continuing operations. Income and loss amounts are net of income tax.
2. Show two ways of reporting Hillstride’s retained earnings restriction.
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