Question

On January 1, 2020, Windsor Industries had stock outstanding as follows. 6% Cumulative preferred stock, $100 par value, issued and outstanding 10,100 shares $1,010,000 Common stock, $10 par value, issued and outstanding 199,000 shares 1,990,000 To acquire the net assets of three smaller companies, Windsor authorized the issuance of an additional 158,400 common shares. The acquisitions took place as shown below. Date of Acquisition Shares Issued Company A April 1, 2020 50,400 Company B July 1, 2020 78,000 Company C October 1, 2020 30,000 On May 14, 2020, Windsor realized a $91,200 (before taxes) insurance gain on discontinued operations. On December 31, 2020, Windsor recorded income of $298,800 from continuing operations (after tax). Assuming a 20% tax rate, compute the earnings per share data that should appear on the financial statements of Windsor Industries as of December 31, 2020. (Round answer to 2 decimal places, e.g. $2.55.)

Answer 1

To compute the earnings per share data that should appear on the financial statements of Windsor Industries as of December 31, 2020, we need to calculate the weighted average number of common shares outstanding.

The weighted average number of common shares outstanding can be calculated as follows:

First, we need to determine the number of common shares outstanding before the acquisitions:

199,000 + 0 = 199,000

Then, we need to add the common shares issued for each acquisition, multiplied by the portion of the year that the shares were outstanding:

Company A: 50,400 shares x (9/12) = 37,800

Company B: 78,000 shares x (6/12) = 39,000

Company C: 30,000 shares x (3/12) = 7,500

Total weighted average number of common shares outstanding:

199,000 + 37,800 + 39,000 + 7,500 = 283,300

Next, we need to calculate the net income attributable to common shareholders:

Net income from continuing operations: $298,800 Less: Taxes (20%): $59,760 Net income attributable to common shareholders: $239,040

Finally, we can calculate the earnings per share:

Earnings per share = Net income attributable to common shareholders / Weighted average number of common shares outstanding = $239,040 / 283,300 = $0.84

Therefore, the earnings per share data that should appear on the financial statements of Windsor Industries as of December 31, 2020 is $0.84.

Step-by-step explanation: