On January 1, 2012, Bailey Industries had stock outstanding as follows. To acqui
ID: 2368389 • Letter: O
Question
On January 1, 2012, Bailey Industries had stock outstanding as follows.
To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional 278,400 common shares. The acquisitions took place as shown below.
On May 14, 2012, Bailey realized a $144,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.
On December 31, 2012, Bailey recorded net income of $356,400 before tax and exclusive of the gain.
Assuming a 45% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2012. Assume that the expropriation is extraordinary. (Round answer to 2 decimal places, e.g. $2.55.)
issued and outstanding 10,900 shares
$1,199,000 Common stock, $12 par value, issued and
outstanding 236,400 shares 2,836,800
Explanation / Answer
EPS = Total Earningattributable toequity Shareholder/ Weighted Avg of No of Share outstanding
Total Earningattributable toequity Shareholder
Net Income Before Tax = $356,400
Less: Tax Expenses = $160380
Net Income after tax =$196020
Less: Pref. Dividend on Cum. Pref Dividend = $71940
Earning attributable to equity shareholder = $124080
Weighted Avg of No of Share outstanding
Opening Equity Share = 236400*12/12 = 236400
Equity Share Issue to company A =110400*9/12 =82800
Equity Share Issue to company B =129,600*6/12 =64800
Equity Share Issue to company c=38400*3/12 =9600
Weighted Avg of No of Share outstanding = 393600
? EPS = 124080/393600 = $0.315
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