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Exercise 4-13 At December 31, 2016, Grouper Corporation had the following stock outstanding. 10% cumulative preferred...

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Accounting

Exercise 4-13 At December 31, 2016, Grouper Corporation had thefollowing stock outstanding. 10% cumulative preferred stock, $100par, 107,710 shares $10,771,000 Common stock, $5 par, 4,024,000shares 20,120,000 During 2017, Grouper did not issue any additionalcommon stock. The following also occurred during 2017. Income fromcontinuing operations before taxes $21,850,000 Discontinuedoperations (loss before taxes) $3,295,000 Preferred dividendsdeclared $1,077,100 Common dividends declared $2,380,000 Effectivetax rate 35 % Compute earnings per share data as it should appearin the 2017 income statement of Grouper Corporation. (Round answersto 2 decimal places, e.g. 1.48.)

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Net income:
      Income before income tax $ 21,850,000
      Income tax applied (35% X $21,850,000)       7,647,500
      Income from continuous operations     14,202,500
      Discontinued operations loss
            Loss before income tax $ 3,295,000
            Less: Applied income tax (35%)     1,153,250     (2,141,750)
      Net income calculated $ 12,060,750
Preference dividends declared: $   1,077,100
Weighted average common shares outstanding       4,024,000
Earnings per share calculation
      Income from continuous operations $3.26*
      Discontinued operations loss, net of tax (0.53)**
      Net income $2.73***
*($14,202,500 – $1,077,100) ÷ 4,024,000. (Rounded)
**$2,141,750 ÷ 4,024,000. (Rounded)
***($12,060,750 – $1,077,100) ÷ 4,024,000.

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