Question

At December 31, 2019, Skysong Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 108,966 shares $10,896,600 Common stock, $5 par, 4,044,060 shares 20,220,300 During 2020, Skysong did not issue any additional common stock. The following also occurred during 2020. Income from continuing operations before taxes $22,887,900 Discontinued operations (loss before taxes) $3,284,900 Preferred dividends declared $1,089,660 Common dividends declared $2,204,300 Effective tax rate 35 %
Compute earnings per share data as it should appear in the 2020 income statement of Skysong Corporation. (Round answers to 2 decimal places, e.g. 1.48.)

Answer 1

Answer:

Earnings per share from continuing operations is $3.41 per share.

Earnings per share from discontinued operations is -$0.53 per share.

Explanation:

The earnings per share data can be computed by preparing a partial income statment as follows:

Skysong Corporation

Income Statement (Partial)

As at December 31, 2019

Particulars                                                                            Amount ($)  

Continuing operations

Income from continuing operations before taxes           22,887,900

Taxes on continuing operations (22,887,900 * 35%)       (8,010,765)  

Income from continuing operations after taxes                14,877,135

Preferred dividends declared                                           (1,089,660)  

Income from continuing operations after pref. div.           13,787,475

Discontinued operations

Discontinued operations (loss before taxes)                    (3,284,900)  

Tax benefit on discontinued oper. (3,284,900 * 35%)          1,149,715  

Discontinued operations (loss after taxes)                         (2,135,185)

Earnings per share:

Continuing operations  (13,787,475 / 4,044,060)                      3.41

Discontinued operations (2,135,185 / 4,044,060)                    (0.53)