Problem 19-10 EPS from statement of shareholders\' equity L019-4, 19-5, 19-6 Com
ID: 2555939 • Letter: P
Question
Problem 19-10 EPS from statement of shareholders' equity L019-4, 19-5, 19-6 Comparative Statements of Shareholders' Equity for Locke Intertechnology Corporation were reported as follows for the fiscal years ending December 31,2014, 2015, and 2016. Statements of Shareholders' Equity For the Years Ended Dec. 31, 2014, 2015, and 2016 $ in milions) CapitalRetained Total 492 92 CommonPai-n Eaming $2,502 PreferredCommon Stock, Stock, $10 par$1 par Balance at January 1,2014 80 530 480 1,892 Sale of preferred shares Sale of common shares, 7/1 Cash dividend, preferred Cash dividend, common Net income 12 81 (18) 310 (18) 2,180 3,374 (61) Balance at December 31, 2014 12 91 1,091 Re irement of common shares, (21) Cash dividend, preferred Cash dividend, common 3-for-2 split effected in the (22) (22) form of a common stock dividend, 8/12 43.5 (43.5) Net income 410 410 Balance at December 31,2015 130.5 13.05 12 3,697 2,543 130(143.05) 1,012 10% common stock dividend. 38 Sale of common shares, 9/1 Cash dividend, preferred Cash dividend, common Net income (29) 426 (29) 426 Balance at December 31, 2016 12 $146.55$1,179.5 $2,793.95 $4,132 Infer from the statements the events and transactions that affected Locke Intertechnology Corporation's shareholders' equit for the years ended December 31, 2014, 2015, and 2016. No potential common shares were outstanding ty and compute earnings per share as it would have appeared on the income statements during any of the periods shown. (Enter your answers in millions rounded to 2 decimal places (ieExplanation / Answer
2014
Earnings to Equity Shares = $310 - $4 = $306
No. Of Shares = 80 + 11(6/12) = 85.5
2015
Earnings to Equity Shares = $410 - $4 = $406
No. Of Shares = 91 (1.50) + 4(9/12) (1.50) = 132
2016
Earnings to Equity Shares = $426 - $3 = $423
No. Of Shares = 130.5 (1.10) + 3(4/12) = 144.55
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Year Numerator / Denominator = Earnings per share 2014 $306 / 85.5 = $3.58 2015 $406 / 132 = $3.08 2016 $423 / 144.55 = $2.93