Answer:
a.Earnings per share $7.78
Dividends per share $1.83
b. $120,300
Explanation:
a. Calculation to determine the earnings per share and the common dividends per share for Elite Trailer Parks.
First step is to calculate the Increase in retained earnings
Operating profit $293,000
Interest expense ($38,800)
=Earnings before taxes $254,200
Less Taxes ($65,500)
Earnings after taxes = $188,700
Preferred dividends ($31,500)
Available to common stockholders $157,200
Common dividends ($36,900)
Increase in retained earnings $120,300
($157,200-$36,900)
Now let determine Earnings per share and Dividends per share using this formula
Earnings per share = Available to common stockholders/ Number of common shares outstanding
Let plug in the formula
Earnings per share = $157,200/20,200
Earnings per share= $7.78
Dividends per share = Common dividends/ Number of shares outstanding
Let plug in the formula
Dividends per share=$36,900/20,200
Dividends per share= $1.83
Therefore the earnings per share and the common dividends per share for Elite Trailer Parks is:
Earnings per share $7.78
Dividends per share $1.83
B. Based on the information above calculation in (a) the increase in retained earnings for the year is $120,300