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Elite Trailer Parks has an operating profit of $256,000. Interest expense for the year was $33,800; preferred dividends paid were $31,800; and common dividends paid were $38,000. The tax was $66,400. The
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13 votes
Elite Trailer Parks has an operating profit of $256,000. Interest expense for the year was $33,800; preferred dividends paid were $31,800; and common dividends paid were $38,000. The tax was $66,400. The firm has 17,500 shares of common stock outstanding. a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.) b. What was the increase in retained earnings for the year

User Priyantha
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9 votes

Answer and Explanation:

The computation is shown below:

Operating profit $256,000

Less: interest expense -$33,800

EBT $222,200

Less : taxes -$66,400

Net income $155,800

a.EPS is

= Net income ÷ Common stock outstanding

= $155,800 ÷ 17500

= $8.90

Common dividend per share is

= Common dividends paid ÷ Common stock outstanding

= $38000 ÷ 17500

= $2.17

b.Increase in retained earnings is

= Net income - Preferred dividends - Common dividends

= $155,800 - $31,800 - $38000

= $86,000

User Ycshao
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