Question 3 On January 1, 2017, Sheffield Industries had stock outstanding as follows. 6% Cumulative preferred...

Question 3

On January 1, 2017, Sheffield Industries had stock outstanding as follows.

6% Cumulative preferred stock, $100 par value, issued and outstanding 9,700 shares		$970,000
Common stock, $10 par value, issued and outstanding 203,000 shares		2,030,000

To acquire the net assets of three smaller companies, Sheffield authorized the issuance of an additional 163,200 common shares. The acquisitions took place as shown below.

Date of Acquisition		Shares Issued
Company A April 1, 2017		49,200
Company B July 1, 2017		82,800
Company C October 1, 2017		31,200

On May 14, 2017, Sheffield realized a $91,200 (before taxes) insurance gain on discontinued operations.

On December 31, 2017, Sheffield recorded income of $330,000 from continuing operations (after tax).

Assuming a 50% tax rate, compute the earnings per share data that should appear on the financial statements of Sheffield Industries as of December 31, 2017. (Round answer to 2 decimal places, e.g. $2.55.)

Sheffield Industries

Income Statement

	$
	$
Net Income/ (loss)	$

Account Titles attached:

Discontunied operations gain, net of tax

dividends, income from continuing operations, income per share before extraordinary item

expenses, loss from discontinuing operations, retained earnings, january 1

extraordinary loss, reatined earnings, december 31, revenues, total expenses,

income before extraodinary item, total revenues

Solutions

Expert Solution

	Calculation of EPS:-

	Dates	Shares	Fraction of year	Weighted
Shares outstanding	1/1/2017	203,000	3/12	50,750
Issued shares	4/1/2017	252,200	3/12	63,050
Issued shares	7/1/2017	335,000	3/12	83,750
Issued shares	10/1/2017	366,200	3/12	91,550

	Weighted-average outstanding shares outstanding			289,100

	Net income			330,000
	Less : Preferred dividends (9,7001006%)			(58,200)
	Income Available to Common Stockholders			271,800

	Earning per share			0.94

	Sheffield Industries
	Income Statement (partial)
	for the month ended December 31, 2014

	Income before extraordinary item			271,800
	Extraordinary gain, net of tax (91,200*50%)			45,600
	Net Income			317,400

	Earnings per share:
	Income before extraordinary item			0.94
	Extraordinary item, net of tax (45,600/289,100)			0.16
	Total earnings per share			1.10

ekkarill92 answered 1 year ago

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