Question

2. Sosa Diet Supplements had earnings after taxes of $800,000 in 20X1 with 200,000 shares of stock outstanding. On January 1, 20X2, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 30 percent.

a. Compute earnings per share for the year 20X1.

b. Compute earnings per share for the year 20X2

5. Arrange the following income statement items so they are in the proper order of an income statement:

Taxes

Earnings per share

Shares outstanding

Earnings before taxes

Interest expense

Cost of goods sold

Depreciation expense

Earnings after taxes

Preferred stock dividends

Operating profit Sales Earnings available to common stockholders

Selling and administrative expense

Gross profit

6.Given the following information, prepare an income statement for the Dental Drilling Company

Selling and administrative expense................................................................$112,000

Depreciation expense.....................................................................................$73,000

Sales...............................................................................................................$489,000

Interest expense.............................................................................................$45,000

Cost of goods sold.........................................................................................$156,000

Taxes..............................................................................................................$47,000

10. Precision Systems had sales of $820,000, cost of goods of $510,000, selling and administrative expense of $60,000, and operating profit of $103,000. What was the value of depreciation expense? Set this problem up as a partial income statement and determine depreciation expense as the “plug” figure required to obtain the operating profit.

Answer 1

HI

As per policy we will solve only top most question here.

Here in year 20X1 earning after tax = $800,000

number of shares = 200,000

a) earning per share in 20X1 = earning after tax/ number of shares

= 800000/200000 = $4 per share

now in 20X2, firm issued 50,000 new shares

so total number of shares = 200000+50000 = 250,000

And earning increased by 30%

so new earning after tax = 800000*(1+30%) = $1,040,000

b) Hence  earning pr share in 20X2 = earning after tax/ number of shares

= 1040000/250000 = $4.16 per share

Thanks