Partially correct answer. Your answer is partially correct. Try again. On Januar
ID: 2426858 • Letter: P
Question
Partially correct answer. Your answer is partially correct. Try again. On January 1, 2014, Lennon Industries had stock outstanding as follows. 6% Cumulative preferred stock, $111 par value, issued and outstanding 10,900 shares $1,209,900 Common stock, $11 par value, issued and outstanding 238,800 shares 2,626,800 To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 261,600 common shares. The acquisitions took place as shown below. Date of Acquisition Shares Issued Company A April 1, 2014 103,200 Company B July 1, 2014 124,800 Company C October 1, 2014 33,600 On May 14, 2014, Lennon realized a $140,400 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000. On December 31, 2014, Lennon recorded net income of $400,800 before tax and exclusive of the gain. Assuming a 42% tax rate, compute the earnings per share data that should appear on the financial statements of Lennon Industries as of December 31, 2014. Assume that the expropriation is extraordinary.
Explanation / Answer
Income before tax = 400800 + 140400 = 541200
Less:Tax ( 227304) [541200*.42]
Income after tax = 313896
Less:Preferred dividend (72594) [10900*111*.06]
Earning available to common stock holders 241,302
2)Weighted average common shares = (238800 *12/12 ) +(103200 *9/12)+(124800 * 6/12)+(33600 * 3/12)
= 238800 + 77400+ 62400 + 8400
= 387000shares
Earning per share = earning after preferred dividend / weighted average shares
= 241302 / 387000
= $ .6235 per share
**238800 SHares are outstanding for whole year ...103200 shares are outstanding for 9 months ...124800 for 6 months and 33600 for 3 months .