Answered

At December 31, 2019, Shiga Naoya Corporation had the following stock outstanding.
10% cumulative preferred stock, $100 par, 107,500 shares $10,750,000
Common stock, $5 par, 4,000,000 shares 20,000,000
During 2020, Shiga Naoya did not issue any additional common stock. The following also occurred during 2020.
Income from continuing operations before taxes $23,650,000
Discontinued operations (loss before taxes) $ 3,225,000
Preferred dividends declared $ 1,075,000
Common dividends declared $ 2,200,000
Effective tax rate 17%
Required:
1. Compute earnings per share data as it should appear in the 2020 income statement of Shiga Naoya Corporation. (Round to two decimal places.)

Answer :

saqib097

Answer:

The earnings per share data as it should appear in the 2020 income statement of Shiga Naoya Corporation is given below.

Explanation:

Net income:

Income from continuing

operation before income tax                                                        $23,650,000

Income tax (17% * 23,650,000)                                                         4,020,500

Income from continuing operations                                                19,629,500

Discontinued operations

       Loss before taxes                                            3,225,000

       Less applicable income tax (17%)                     548,250          2,676,750

Net income                                                                                        16,952,750

Preferred dividends declared                                                            1,075,000

Weighted average common shares outstanding                            4,000,000

Earnings per share:

Income from continuing operations

($19,629,500 - $ 1,075,000)/4,000,000                                               $4.63

Discontinued operations, net of tax

($2,676,750/4,000,000)                                                                        (0.66)                                                        

Net income

($16,952,750 - $1,075,000)/4,000,000                                                $3.96

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