Question

Statement of retained earnings   Hayes Enterprises began 2019 with a retained earnings balance of $ 928 comma 000. During 2019​, the firm earned $ 377 comma 000 after taxes. From this​ amount, preferred stockholders were paid $ 47 comma 000 in dividends. At​ year-end 2019​, the​ firm's retained earnings totaled $ 1 comma 048 comma 000. The firm had 140 comma 000 shares of common stock outstanding during 2019. a. Prepare a statement of retained earnings for the year ended December​ 31, 2019​, for Hayes Enterprises.​ (Note: Be sure to calculate and include the amount of cash dividends paid in 2019​.) b. Calculate the​ firm's 2019 earnings per share​ (EPS). c. How large a​ per-share cash dividend did the firm pay on common stock during 2019​?

Answer 1

Explanation:

a. The preparation of the statement of retained earnings for the year ended December​ 31, 2019 is presented below:

                                                   Hayes Enterprises

                                          Statement of retained earnings

                                For the year ended December​ 31, 2019

Beginning balance of retained earning $928,000

Add: Net income $377,000

Less: Cash Dividend paid

Preference stock dividend -$47,000

Common stock dividend $210,000

Ending balance of retained earning       $1,048,000

The common stock dividend is

= $928,000 + $377,000 - $47,000 - $1,048,000

= $210,000

b. The earning per share is

Earning Per share = (Net income - Preferred Dividends) ÷ (Average Common shares outstanding)

= ($377,000 -$47,000) ÷ (140,000 Shares)

= $2.36 per share

C. Dividend per share = Common Stock dividend ÷ Common Shares outstanding

= $210,000 ÷ 140,000 shares

= $1.50