Question

Elite Trailer Parks has an operating profit of $282,000. Interest expense for the year was $39,200; preferred dividends paid were $29,500; and common dividends paid were $40,900. The tax was $61,700. The firm has 25,800 shares of common stock outstanding.

a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks
b.What was the increase in retained earnings for the year?

Answer 1

(a) $5.87 per share ; $1.585 per share

(b) $110,700

Step-by-step explanation:

(a) Earnings per share:

= (Operating profit - Interest expense - tax - preferred dividends) ÷ common stock outstanding

= ($282,000 - $39,200 - $61,700 - $29,500) ÷ 25,800

= $151,600 ÷ 25,800

= $5.87 per share

Common dividends per share for elite trailer parks:

= Dividend paid ÷ common stock outstanding

= $40,900 ÷ 25,800

= $1.585 per share

(b) The increase in retained earnings for the year:

= $151,600 - common dividend paid

= $151,600 - $40,900

= $110,700