At December 31, 2016, Blossom Corporation had the following stock outstanding 10

Question

At December 31, 2016, Blossom Corporation had the following stock outstanding 10% cumulative preferred stock, 100 par, 108,636 shares $10,863,600 Common stock, $5 par, 4,075,400 shares 20,377,000 During 2017, Blossom did not issue any additional common stock. The following also occurred during 2017. Income from continuing operations before taxes Discontinued operations (loss before taxes) Preferred dividends declared Common dividends declared Effective tax rate $22,767,400 $3,461,300 $1,086,360 $2,368,400 35 % Compute earnings per share data as it should appear in the 2017 income statement of Blossom Corporation. (Round answers to 2 decimal places, e.g. 1.48.) Earnings Per Share Income from Continuing Operations # Discontinued Operations Net Income/(Loss) $

Explanation / Answer

Ans:

Calculation of Earnigs per share:

EPS= Earings avialable to equity shareholders/no.of outstanding shares

= 11,462,605/4,075,400

Earnigs per share is 2.81.

Note: Common dividend is declared out of Earnigs avialable to Equity share holders, hence it is not considered in calculating EPS. In simple words, Dividend per share is declared out of Earnigs per share.

Particulars Amount(in $) Income from continuing operations 22,767,400 Loss from discontiued operations (3,461,300) Net income before tax 19,306,100 Tax(19,306,100*35%) (6,757,135) Net income after tax 12,548,965 Preferencial dividends (1,086,360) Earnings avialable to equity shareholders 11,462,605

EPS= Earings avialable to equity shareholders/no.of outstanding shares

= 11,462,605/4,075,400

2.81

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