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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 (9,700*100*6%)    (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 3 years ago
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