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At December 31, 2016 Tim Mattke Corporation has the following stock outstanding:    10% cumulative preferred...

At December 31, 2016 Tim Mattke Corporation has the following stock outstanding:

   10% cumulative preferred stock, $100 par, 107,500 shares $10,750,000

   Common stock, $5 par, 4,000,000 shares 20,000,000

During 2017, Tim Mattke did not issue any additional common stock. The following also occurred during 2017.

   Income from continuing operations before taxes $23,650,000

   Discontinued operations before tax benefit ($3,225,000)

   Preferred dividends declared $ 1,075,000

   Common dividends declared $ 2,200,000

   Effective tax rate 35%

Required: Compute the earnings per share as it should appear in the 2017 Income Statement of Tim Mattke Corporation. (Round to the nearest two decimal places.)

Business   Accounting   
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Answer #1

Net income:

Income from continuing operations before tax 23,650,000
Income tax (35% *23650000) 8277500 15372500
Discontinued operations:
Loss before income tax 3225000
Applicable income tax (35%) 1128750 (2096250)
Net income $ 13,276,250
Preferred divided declared $ 1075000
Weighted average common shares outstanding 4,000,000
Earning per share:

Income from continuing operations

(15,372,500 - 1,075,000) / 4,000,000

 $ 3.57

Discontinued operations, net of tax

($ 2,096,250 / 4,000,000)

 (0.52)

Net income

($ 13,276,250 - $ 1,075,000) / 4,000,000

 $ 3.05
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