Question

t the end of the year, the records of NCIS Corporation provided the following selected and incomplete data: Common stock ($10 par value); no changes in account during the year. Shares authorized: 290,000. Shares issued: _______ (all shares were issued at $14 per share; $2,170,000 total cash collected). Treasury stock: 5,000 shares (repurchased at $18 per share). The treasury stock was acquired after a stock split was announced. Net income: $297,000. Dividends declared and paid: $165,000. Retained earnings beginning balance: $645,000. Required: 1. Complete the following tabulation: 2. Calculate the balance in the Additional paid-in capital account. 3. What is earnings per share (EPS)

Answer 1

1. Required tabulation is the Shares Authorized, the Shares Issued and the Shares Outstanding

Shares Authorized = 290,000 shares

Shares Issued

= Total Cash Collected / Price per share

= 2,170,000 / 14

= 155,000 shares

Shares Outstanding

= Shares Issued - Treasury stock

= 155,000 - 5,000

= 150,000 shares

2. Additional paid in capital account

= Gain (loss) above par

Par value is $10 and Stock was sold for $14

= (14 - 10 ) * 155,000

= $620,000

3. Earnings per share

= Net Income/ Shares outstanding

= 297,000/150,000

= $1.98