Question

The net income reported on the income statement of Cutler Co. was $1,880,000. There were 100,000 shares of $18 par common stock and 40,000 shares of $3 preferred stock outstanding throughout the current year. The income statement included a gain on discontinued operations of $230,000 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

Solutions a:- Income before discontinued of Operation = Net income - Gain on discontinued operations

= $18,80,000- $2,30,000

= $16,50,000

Preferred stock dividend = 40000 shares X $3 = $1,20,000

Per share figure for Common stock for income before discontinued operation= ( Income before discontinued operations - Preferred Stock Dividend ) / Numbers of Common stock shares

= ($16,50,000 - $1,20,000) / 100000 shares = $15.3per share

Solution b:- Per share figure for common stock for net income = (Net Income - Preferred Stock Dividend ) / No. Common Stock Shares

= ($18,80,000. - $1,20,000) / 100,000 shares

= $17.6per share