Question

The net income reported on the income statement of Cutler Co. was $2,460,000. There were 50,000 shares of $18 par common stock and 20,000 shares of $5 preferred stock outstanding throughout the current year. The income statement included a gain on discontinued operations of $300,000 after applicable income tax.

a. Determine the per-share figure for common stock for income before discontinued operations. Round your answer to the nearest cent.
$ per share
b. Determine the per-share figure for common stock for net income. Round your answer to the nearest cent.
$ per share

Answer 1

Answer and Explanation:

The computation is shown below:

a. The earning per share is

= (PAT - income tax discontinued operations - Preference dividend) ÷ number of common stock

= ($2,460,000 - $300,000 - (20,000 × $5)) ÷ (50,000 shares)

= $41.2 per share

b. The earning per share is

= (PAT - Preference dividend) ÷ number of common stock

= ($2,460,000 - (20,000 × $5)) ÷ (50,000 shares)

= $47.2 per share