What has been the net earnings per share (after taxes) for the quater ended June
ID: 2483342 • Letter: W
Question
What has been the net earnings per share (after taxes) for the quater ended June 30, on the 25,000 outstanding shares held by Summerset Fencing Stockholders?
Summerset Fencing
Balance Sheet
June 2017
_____________________________________________________________________
ASSETS
Current Assets:
Cash $ 28,332.90
Short-Term Investments 6,500.00
Accounts Receivable 104,068.00
Notes Receivable 13,280.00
Interest Receivable 286.53
Raw and In-Process Inventory 36,820.80
Prepaid Insurance 3,158.00
Prepaid Rent 16,600.00
Prepaid Property Tax 0.00
Prepaid Advertising 485.00
Office Supplies 735.80
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Total Current Assets $ 210,267.03
Plant and Equipment
Office Equipment $ 35,530.00
Accumulated Depreciation 15,829.00
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Book Value $ 19,701.00
----------
Shop Equipment 136,101.00
Accumulated Depreciation 34,050.00
----------
Book Value $ 102,051.00
----------
Trucks 40,255.00
Accumulated Depreciation 18,929.00
----------
Book Value $ 21,326.00
----------
Factory 180,000.00
Accumulated Depreciation 100,376.00
----------
Book Value $ 79,624.00
----------
Shipping Facility 32,860.00
Accumulated Depreciation 18,600.00
----------
Book Value $ 14,260.00
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Total Plant and Equipment 236,962.00
----------
Total Assets $ 447,229.03
==========
LIABILITIES
Current Liabilities
Accounts Payable $ 57,759.00
Notes Payable 0.00
Dividends Payable 0.00
Salaries and Wages Payable 12,596.00
Estimated Prop. Taxes Payable 843.00
Income Taxes Payable 4,600.00
Interest Payable 0.00
Unearned Revenue 8,000.00
----------
Total Current Liabilities $ 83,798.00
Mortgage Note Payable 6,800.00
----------
Total Liabilities $ 90,598.00
STOCKHOLDERS' EQUITY
Common Stock $ 250,000.00
Retained Earnings 106,631.03
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Total Stockholder's Equity 356,631.03
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Total Liabilities and Owner's Equity $ 447,229.03
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Explanation / Answer
Earnings per share are calculated based on the net earnings after tax.
Earnings per share (EPS) = Net earnings after taxes / No. of shares outstanding
= $106,631.03 / 25,000
= $ 4.2652
Income statement is important to calculate the EPS but here it is missing and therefore, the following assumptions are taken to complete the answer.
Note: It is assumed that total retained earnings mentioned in the stockholders’ equity section of the balance sheet is net income for the quarter ending June 2017. It is also assumed that it is the first year and first quarter of operations where retained earnings of $106,631.03 are not cumulative for the past but only for the said quarter.
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