Question

Earnings per Share, Extraordinary Item

The net income reported on the income statement of Goth Co. was $2,340,000. There were 100,000 shares of $23 par common stock and 40,000 shares of $6 preferred stock outstanding throughout the current year. The income statement included two extraordinary items: a $470,000 gain from condemnation of land and a $180,000 loss arising from flood damage, both after applicable income tax.

a. Determine the per-share figure for common stock for income before extraordinary items. Round your answer to the nearest cent.
$ per share

b. Determine the per-share figure for common stock for net income. Round your answer to the nearest cent.
$ per share

Answer 1

Determination of the per-share figure for common stock for income before extraordinary items
		Particulars	$
Net Income	23,40,000
Less: Gain from condemnation of land	4,70,000
Add: Loss arising from flood damage	1,80,000
Net income before extra ordinary items	20,50,000
Less: Preference Dividend (40000*6)	2,40,000
Net income attributed to Common stock holders	18,10,000
Number of shares	100000
per-share figure for common stock (1810000/100000)	18.1

Determination of the per-share figure for common stock for net income
		Particulars	$
Net Income	23,40,000
Less: Preference Dividend (40000*6)	2,40,000
Net income attributed to Common stock holders	21,00,000
Number of shares	100000
per-share figure for common stock (2100000/100000)	21