Question

On December 31, 2017, Ainsworth, Inc., had 820 million shares of common stock outstanding. Thirty three million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $205 million, including an after-tax loss from discontinued operations of $530 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.75, based on net income (no discontinued operations) of $615 million and a weighted-average number of common shares of 820 million.

Answer 1

Calculation of net loss per share for the year ended
preferred dividend = 100*6%*33million = 198
wehighted average of common stock
shares	months	outstanding shares
820 million	*12/12	820
-30 million	*8/12	-20
12 million	*4/12	4
wehighted average of common stock		804
Net loss per share = net loss-preferred dividend/weighted avg share
-205-198 /804 million
403 million/804 million = 0.501
net loss per share = 0.501
2) calculation of earning per share
income from contiuing operation		325
extraordinary loss net of tax		530
net loss		-205
EPS= Net profit-preferred dividend/weighted avf share
EPS = 325-198/804 = 0.157
EPS = 0.157
3) 5% of stock dividend isssued
weighted avg share= 820*1.05 = 861million
EPS 2017 = 615/861 = 0.714
EPS 2018 = 5.30/840 = 0.630
EPS -continuing operations		0.157	0.71
extraordinary loss net of tax		-0.63	0
Earnind per share		-0.473	0.71