Grouper Corporation is preparing the comparative financialstatements for the annual report to its shareholders for fiscalyears ended May 31, 2017, and May 31, 2018. The income fromoperations for the fiscal year ended May 31, 2017, was $1,772,000and income from continuing operations for the fiscal year ended May31, 2018, was $2,440,000. In both years, the company incurred a 9%interest expense on $2,385,000 of debt, an obligation that requiresinterest-only payments for 5 years. The company experienced a lossfrom discontinued operations of $585,000 on February 2018. Thecompany uses a 40% effective tax rate for income taxes.
The capital structure of Grouper Corporation on June 1, 2016,consisted of 977,000 shares of common stock outstanding and 20,100shares of $50 par value, 6%, cumulative preferred stock. There wereno preferred dividends in arrears, and the company had not issuedany convertible securities, options, or warrants.
On October 1, 2016, Grouper sold an additional 475,000 shares ofthe common stock at $20 per share. Grouper distributed a 20% stockdividend on the common shares outstanding on January 1, 2017. OnDecember 1, 2017, Grouper was able to sell an additional 781,000shares of the common stock at $22 per share. These were the onlycommon stock transactions that occurred during the two fiscalyears.
Determine the weighted-average number of shares that GrouperCorporation would use in calculating earnings per share for thefiscal year ended:
Weighted-average number of shares
(1) May 31, 2017 Entry field with incorrect answer now containsmodified data
(2) May 31, 2018 Entry field with incorrect answer
Prepare, in good form, a comparative income statement, beginningwith income from operations, for Grouper Corporation for the fiscalyears ended May 31, 2017, and May 31, 2018. This statement will beincluded in Grouper’s annual report and should display theappropriate earnings per share presentations. (Round earnings pershare to 2 decimal places, e.g. $1.55.)
