At December 31, 2017, Flounder Corporation had the following shares outstanding:

Question

At December 31, 2017, Flounder Corporation had the following shares outstanding:

During 2017, the corporation’s only share transaction was the issuance of 360,000 common shares on April 1. During 2017, the following also occurred:

Calculate earnings per share information as it should appear in the financial statements of Flounder Corporation for the year ended December 31, 2017. (Round per share answer to 2 decimal places, e.g. 52.75.)

9% cumulative preferred shares, 113,000 shares outstanding $11,300,000 Common shares, 3,880,000 shares outstanding 19,400,000

Explanation / Answer

Net income:

      Income from continuing operations
          before income tax............................................

$22,630,000

      Income tax (33% X $22,630,000).......................

   7,467,900

      Income from continuing operations.................

15,162,100

      Discontinued operations

            Loss before income tax................................

$3,044,000

            Less: Applicable income tax (33%)............

1,004,520

   (2,039,480)

      Net income............................................................

$13,122,620

Preferred dividends declared:.................................

$ 1,017,000

Weighted average common shares outstanding

3,880,000

Earnings per share

      Income from continuing operations.................

$3.65*

      Discontinued operations, net of tax.................

   (.53)**

      Net income............................................................

$3.12***

   *($15,162,100 – $1,017,000) ÷ 3,880,000. (Rounded)

**$2,039,480 ÷ 3,880,000. (Rounded)

***($13,122,620 – $1,017,000) ÷ 3,880,000.

Net income:

      Income from continuing operations
          before income tax............................................

$22,630,000

      Income tax (33% X $22,630,000).......................

   7,467,900

      Income from continuing operations.................

15,162,100

      Discontinued operations

            Loss before income tax................................

$3,044,000

            Less: Applicable income tax (33%)............

1,004,520

   (2,039,480)

      Net income............................................................

$13,122,620

Preferred dividends declared:.................................

$ 1,017,000

Weighted average common shares outstanding

3,880,000

Earnings per share

      Income from continuing operations.................

$3.65*

      Discontinued operations, net of tax.................

   (.53)**

      Net income............................................................

$3.12***

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