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At December 31, 2019, Shiga Naoya Corporation had the following stock outstanding. 10% cumulative preferred stock,...

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 %


Compute earnings per share data as it should appear in the 2020 income statement of Shiga Naoya Corporation.

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Expert Solution

SHIGA NAOYA CORPORATION
INCOME STATEMENT
DECEMBER 31, 2020
Net income:
Income from continuing operation before income tax $    23,650,000.00
Income tax (17% * 21,900,000) $      4,020,500.00
Income from continuing operations $    19,629,500.00
Discontinued operations:
Less: Loss before taxes $ 3,225,000.00
Less applicable income tax (17%) $   548,250.00 $      2,676,750.00
Net income $ 16,952,750.00
Preferred dividends declared $      1,075,000.00
Weighted average common shares outstanding          4,000,000.00
Earnings Per Share:
Income from Continuing Operations $                  4.64
($19,629,500 - $ 1,075,000)/4,000,000
Discontinued Operations $                (0.67)
($2,676,750/4,000,000)
Net Income / (Loss) $                  3.97
($16,952,750 - $1,075,000)/4,000,000

ekkarill92 answered 3 years ago
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