Question

Shown below is the stockholders' equity section of Flamingo Corporation's balance sheet at December 31, 2020:

Flamingo Corporation
Statement of Stockholder's Equity
December 31, 2020
Common stock, $3 par value, 200,000 shares authorized, ____ shares issued and _____ outstanding	$360,000
Additional paid in capital – common stock	$400,000
Additional paid in capital – stock options	$42,000
Total Paid in Capital	$760,000
Retained Earnings	$1,600,000
Less: Treasury Stock (10,000 shares)	($295,000)
Total Stockholder’s Equity	$2,065,000

Consider the following events in preparing a Statement of Stockholder’s Equity and earnings per share for the year 2021.

1/1/20	On January 1, 2019, the company granted 4 executive employees the option to purchase 12,000 shares (3,000 shares each) of common stock at $12 per share. The Black-Scholes option pricing model determines total compensation expense to be $63,000. The option becomes exercisable on December 31, 2021, after the employee completed three years of service. The market price of the company’s stock was $18 on January 1, 2019 and $30 on December 31, 2020
1/31/21	One of the executives who was granted the above options was fired and left the company.
1/31/21	The company issued 1,000 shares of $3 par common stock in exchange for land. Although several real estate appraisers disagree on the value of the land in a range from $30,000 to $34,500, the company’s stock is currently selling on a stock exchange for $31 per share.
4/1/21	The company purchased 2,000 common shares of treasury stock at $34 per share.
5/1/21	The company reissued 8,000 shares of the treasury stock at $37 per share.
6/1/21	The company reissued 2,600 shares of treasury stock at $32 per share.
7/1/21	The company issued 3,000 shares of 5% cumulative convertible preferred stock, $100 par value, for $108 per share. Each share is convertible into 3 shares of common stock.
12/1/21	The company declared a 10% stock dividend to all common stockholders of record. The market value of the common stock is $36 per share
12/20/21	The board of directors declared the preferred stock dividend and a dividend of $.5 per share on the common stock.
12/31/21	The market value of the company's common stock is $40 per share

The company’s net income for 2021 is $1,235,000 -- BEFORE any of the above transactions.

Complete the following in EXCEL prepared in GOOD FORM and using formulas. Organize your analysis appropriately to:

• Prepare the company's Statement of Stockholder's Equity in good form

• Compute Earnings per Share

Answer 1

A) STATMENTS OF STOCKHOLDERS EQUITY.

   FLAMINGO CORPORATIONS

STATEMENTS OF STOCKHOLDERS EQUITY.

FOR THE YEAR ENDING DECEMBER 31 2021

DATE		COMMON STOCK $3 PAR	PAID IN CAPITAL	RETAINED EARNINGS	TRESURY STOCK	TOTAL STOCKHOLDERS EQUITY
01/01/21	BALANCE	$3,60,000	$4,42,000	16,00,000	(2,95,000)	21,07,000
1/1/21	ISSUE OF COMMON STOCK AS STOCK OPTION		1,08,000 (9000*12)			1,08,000
31/1/21	ISSUE OF SHARES	3000				3000
1/4/21	PURCHASE TRESURY STOCK				(68000) (2000*34)	(68000)
1/5/21	reissue OF TRESURY STOCK				2,96,000 8000*37	2,96,000
1/6/21	REISSUE OF TRESURY STOCK				83,200 (2600*32)	83,200
1/7/21	ISSUE OF PREFERED STOCK	3,24,000 (9000*36)				3,24,000
1/12/21	10% STOCK DIVIDEND			(36,300)		(36,300)
20/12/21	PREFERED STOCK DIVIDEND			(1500)		(1500)
	NET INCOME			12,35,000		12,35,000
TOTAL		6,87,000	5,50,000	27,97,200	16,200	40,50,400

EARNING PER SHARE = (NET INCOME - DIVIDEND)./ NO OF COMMON STOCK

= (12,35,000-1500-36,300)/ 31000

   = 38.6

NO OF COMMON STOCK = 120000 SHARES +9000 OPTIONS + 1000 SHARES ISSUE+9000 COMMON STOCK

= 31000