Exercise 4-13 At December 31, 2016, Grouper Corporation had the following stock outstanding. 10% cumulative preferred...

Exercise 4-13 At December 31, 2016, Grouper Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 107,710 shares $10,771,000 Common stock, $5 par, 4,024,000 shares 20,120,000 During 2017, Grouper did not issue any additional common stock. The following also occurred during 2017. Income from continuing operations before taxes $21,850,000 Discontinued operations (loss before taxes) $3,295,000 Preferred dividends declared $1,077,100 Common dividends declared $2,380,000 Effective tax rate 35 % Compute earnings per share data as it should appear in the 2017 income statement of Grouper Corporation. (Round answers to 2 decimal places, e.g. 1.48.)

Expert Solution

Net income:
Income before income tax		$ 21,850,000
Income tax applied (35% X $21,850,000)		7,647,500
Income from continuous operations		14,202,500
Discontinued operations loss
Loss before income tax	$ 3,295,000
Less: Applied income tax (35%)	1,153,250	(2,141,750)
Net income calculated		$ 12,060,750

Preference dividends declared:		$ 1,077,100

Weighted average common shares outstanding		4,024,000

Earnings per share calculation
Income from continuous operations	$3.26*
Discontinued operations loss, net of tax	(0.53)**
Net income	$2.73***

*($14,202,500 – $1,077,100) ÷ 4,024,000. (Rounded)
**$2,141,750 ÷ 4,024,000. (Rounded)
***($12,060,750 – $1,077,100) ÷ 4,024,000.

ekkarill92 answered 10 months ago

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