Comparative Statements of Shareholders’ Equity for Locke Intertechnology Corpora

Question

Comparative Statements of Shareholders’ Equity for Locke Intertechnology Corporation were reported as follows for the fiscal years ending December 31, 2014, 2015, and 2016.

Infer from the statements the events and transactions that affected Locke Intertechnology Corporation's shareholders' equity and compute earnings per share as it would have appeared on the income statements for the years ended December 31, 2014, 2015, and 2016. No potential common shares were outstanding during any of the periods shown. (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)

Comparative Statements of Shareholders’ Equity for Locke Intertechnology Corporation were reported as follows for the fiscal years ending December 31, 2014, 2015, and 2016.

Explanation / Answer

Earnings per share as it would have appeared on the income statements for the years ended December 31, 2014,2015, 2016

=Earnings available for equityshareholders/ no. of share outstanding

Earnings of dec31,2014 = 300

Earnings of dec31,2015, = 400

and Earnings of dec31,2016 = 424

Share outsatanding on dec31, 2014 = 75+525+10+80 = 690 /(f.v. =10) = 69

Share outsatanding on dec31, 2015 = 115.5+ 531.5 = 647 /(f.v. =10) = 64.7

Share outsatanding on dec31, 2016 = 130.05+ 688.5 = 818.55 /(f.v. =10) = 81.855

EPS =Earnings available for equityshareholders/ no. of share outstanding

Dec31, 2014 = 300/69 = 4.35

Dec31, 2015 = 400/64.7 = 6.18

Dec31, 2016 = 424/81.86 = 5.18

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