Range Energy Corp.’s financial statements for the current year ended December 31, 2017, have been completed...

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Accounting

Range Energy Corp.’s financial statements for the current yearended December 31, 2017, have been completed and submitted to youfor review. The equity account balances a year ago, at December 31,2016, are as follows:
  Preferred shares, $4.20 non-cumulative, 12,000shares authorized,
    issued, and outstanding $768,050
  Common shares, unlimited shares authorized,
   140,000 shares issued and outstanding 1,460,350
  Retained earnings 705,795

The only share transactions during 2017 were the declaration anddistribution of a 28,000 common share dividend on July 1 and theissuance of 18,000 common shares for cash on October 31. Thecompany’s 2017 profit was $630,880. A cash dividend on thepreferred shares was declared on December 1, but was not paid as ofDecember 31. Earnings per share for 2017 were calculated asfollows:

Profit
=
$630,880
= $3.39
Common shares outstanding on Dec. 31, 2017 186,000

Required:
1-a. The earnings per share is incorrect. Indicate whatchanges should be made to the numerator and the denominator?
In numerator, profit should decrease by
In denominator, commonshares outstanding should decrease by

Answer & Explanation Solved by verified expert

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If we treat dividend distributed on July 1 28000 as stock dividend Calculation of Weighted Number of Shares outstanding for computing EPS for 2017 Time Interval Portion of Year Share Transaction at the beginning of Time Interval Shares Outstanding during Time Interval Stock Dividend Calculation Weighted Shares Jan 1 June 30 6 months Beginning Balance 140000 120 612 140000 120 84000 See Answer

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Transcribed Image Text

Range Energy Corp.’s financial statements for the current yearended December 31, 2017, have been completed and submitted to youfor review. The equity account balances a year ago, at December 31,2016, are as follows: Preferred shares, $4.20 non-cumulative, 12,000shares authorized, issued, and outstanding$768,050 Common shares, unlimited shares authorized, 140,000 shares issued and outstanding1,460,350 Retained earnings705,795The only share transactions during 2017 were the declaration anddistribution of a 28,000 common share dividend on July 1 and theissuance of 18,000 common shares for cash on October 31. Thecompany’s 2017 profit was $630,880. A cash dividend on thepreferred shares was declared on December 1, but was not paid as ofDecember 31. Earnings per share for 2017 were calculated asfollows:Profit=$630,880=$3.39Common shares outstanding on Dec. 31, 2017186,000Required:1-a. The earnings per share is incorrect. Indicate whatchanges should be made to the numerator and the denominator?In numerator, profit shoulddecreasebyIn denominator, commonshares outstanding shoulddecreaseby


Preferred shares, $4.20 non-cumulative, 12,000shares authorized, issued, and outstanding	$768,050
Common shares, unlimited shares authorized, 140,000 shares issued and outstanding	1,460,350
Retained earnings	705,795

Profit	=	$630,880	=	$3.39
Common shares outstanding on Dec. 31, 2017		186,000