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Exercise 4-10 The stockholders’ equity section of Nash Corporation appears below as of December 31, 2017....

Exercise 4-10 The stockholders’ equity section of Nash Corporation appears below as of December 31, 2017. 8% preferred stock, $50 par value, authorized 100,892 shares, outstanding 90,892 shares $4,544,600 Common stock, $1.00 par, authorized and issued 10,401,200 shares 10,401,200 Additional paid-in capital 20,533,000 Retained earnings $134,778,000 Net income 37,620,000 172,398,000 $207,876,800 Net income for 2017 reflects a total effective tax rate of 34%. Included in the net income figure is a loss of $13,010,500 (before tax) as a result of a non-recurring major casualty. Preferred stock dividends of $363,568 were declared and paid in 2017. Dividends of $1,094,700 were declared and paid to common stockholders in 2017. Compute earnings per share data as it should appear on the income statement of Nash Corporation. (Round answers to 2 decimal places, e.g. 1.48.)

Earnings Per Share Net Income / (Loss) $

Expert Solution

Solution:

Given data,

8% preferred stock, $50 par value,authorized

100,892 shares, outstanding 90,892 shares $4,544,600

Common stock, $1.00 par, authorized and issued 10,401,200 shares 10,401,200

Additional paid-in capital 20,533,000

Retained earnings $134,778,000

Net income 37,620,000 172,398,000 $207,876,800

Net income for 2017 reflects a total effective tax rate of 34%. Included in the net income figure is a loss of $13,010,500 (before tax) as a result of a non-recurring major casualty. Preferred stock dividends of $363,568 were declared and paid in 2017. Dividends of $1,094,700 were declared and paid to common stockholders in 2017

From the given data we need to find Earnings Per Share Net Income.

Compute earnings per share data as it should appear on the income statement of Nash Corporation:

First we calculate Earnings Per Share,

Formula:

Earnings Per Share: (Net income for common stockholder / weighted average numbers of common stock outstanding)

.

Details	Amount ($)
Net income	$37,620,000
Less: Preferred stock devidend	$363,568
Net income for common stockholders	$37,256,432

Weighted average outstanding common stock	$10,401,200

*Earning per share:* ($37,256,432 / $10,401,200)	*$3.58*

.

Earnings Per Share Net Income / (Loss)

$3.58

ekkarill92 answered 1 year ago

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