Question

Elite Trailer Parks has an operating profit of $285,000. Interest expense for the year was $30,500; preferred dividends paid were $28,900; and common dividends paid were $36,800. The tax was $68,500. The firm has 21,600 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. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks.

$7.27 per share

b. What was the increase in retained earnings for the year?

$120,300

Step-by-step explanation:

Operating profit of $285,000

Interest expense = $30,500

Preferred dividends = $28,900

Common dividends = $36,800

Tax = $68,500

Net Income = 285,000 - 30,500 - 68500 = 186,000

Shares of common stock outstanding = 21,600

a.

Earning per share = ( Net Income - preferred dividend ) / Common stock outstanding

Earning per share = ( 186,000 - 28,900 ) / 21600

Earning per share = $7.27 / share

Common dividend per share = 36,800 / 21,600 = $1.7 / share

b.

Increase in retained earning = 186,00 - 28,900 - 36,800 = $120,300