Exercise 16-20 Date of Acquisition Shares Issued Exercise 16-20 Your answer is p

Question

Exercise 16-20

Date of Acquisition

Shares Issued

Exercise 16-20

Your answer is partially correct. Try again. On January 1, 2014, Lennon Industries had stock outstanding as follows. 6% Cumulative preferred stock, $105 par value,   issued and outstanding 10,800 shares $1,134,000 Common stock, $10 par value, issued and   outstanding 285,600 shares 2,856,000
To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 229,200 common shares. The acquisitions took place as shown below.

Date of Acquisition

Shares Issued

Company A April 1, 2014 92,400 Company B July 1, 2014 111,600 Company C October 1, 2014 25,200
On May 14, 2014, Lennon realized a $129,600 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.

On December 31, 2014, Lennon recorded net income of $304,800 before tax and exclusive of the gain.

Assuming a 41% tax rate, compute the earnings per share data that should appear on the financial statements of Lennon Industries as of December 31, 2014. Assume that the expropriation is extraordinary. (Round answer to 2 decimal places, e.g. $2.55.) Income before extraordinary gain

$

extraordinary gain

Net Income/Loss

$

Explanation / Answer

Income before extraordinary gain 304800 Add:Extraordinary gain 129600 Net Income Before tax 434400 less : Tax   (434400 *.41) - 178104 Net Income after tax 256296 Less:Preferred dividend   [1134000*.06) -68040 Earning available to common stockholders 188256 Number oof shares outstanding   [285600+229200] 514800 Earning per share      [188256/514800] $ .37 per share

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