West Coast. Inc. has a net income of $600,000 for 2005 There are 500,000 weighte

Question

West Coast. Inc. has a net income of $600,000 for 2005 There are 500,000 weighted average shares, of common stock outstanding Dividents declared and paid during the year amounted to $40 000 on Preferred Stock and $160,000 on Common Stock The earnings per share reported for 2005 is: In 2005 Crawfish Inc discovered that its now accountant reported depreciation expense on Land on the 2004 financial statements To correct this error in 2005, we must Increase retained earnings with a prior period adjustment Decrease retained earnings with a prior period adjustment Increase net income with a change in an accounting principle Do nothing - it is not an error to depreciate Land

Explanation / Answer

7.

$1.20

Earning per share = Net earnings/ Weighted no of shares= $600000/500000 =1.20

8.

Increase retained earnings with a prior period adjustment

As land is not a depreciable asset and depreciation on land in past decreased the retained earning.

C.

$1.20

Earning per share = Net earnings/ Weighted no of shares= $600000/500000 =1.20

8.

a.A

Increase retained earnings with a prior period adjustment

As land is not a depreciable asset and depreciation on land in past decreased the retained earning.

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