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In: Accounting

At December 31, 2016, Novak Corporation had the following stock outstanding. 10% cumulative preferred stock, $100...

At December 31, 2016, Novak Corporation had the following stock outstanding.

10% cumulative preferred stock, $100 par, 108,060 shares		$10,806,000
Common stock, $5 par, 4,031,000 shares		20,155,000

During 2017, Novak did not issue any additional common stock. The following also occurred during 2017.

Income from continuing operations before taxes	$22,200,000
Discontinued operations (loss before taxes)	$3,335,000
Preferred dividends declared	$1,080,600
Common dividends declared	$2,480,000
Effective tax rate	35	%

Compute earnings per share data as it should appear in the 2017 income statement of Novak Corporation. (Round answers to 2 decimal places, e.g. 1.48.)

Expert Solution

Earnings per share data as it should appear in the 2017 income statement of Novak Corporation is as follows:

Novak Corporation

Income Statement

For the year ended December 31, 2017

	$	$
Income from continuing operations before taxes		22,200,000
Income Tax 35%		(7,770,000)
Income from continuing operations		$14,430,000
Discontinued operations (loss before taxes)	3,335,000
Income Tax Benefit 35%	(1,167,250)	2,167,750
Net Income		$12,262,250

Earning Per Share:

a) Income from continuing operations = ($14,430,000 - $1,080,600) / 4,031,000 Shares

= $3.31

b) Discontinued operations = $2,167,750 / 4,031,000 Shares

= $0.54

c) Net Income = ($12,262,250 - $1,080,600) / 4,031,000 Shares

= $2.77

OR

Earning Per Share of Net Income = $3.31 - $0.54

= $2.77

ekkarill92 answered 2 years ago

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