cali_gal_83
May 19, 2008, 06:06 PM
Hi, I am stuck on a problem.
On January 1, 2005, Lennon Industries had stock outstanding as follows.
6% Cumulative preferred stock $100 par value
issued and outstanding 10,000 shares $1,000,000
Common stock, $10 par value, issued and
outstanding 200,000 shares 2,000,000
To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 160,000 common shares. The acquisitions took place as follows.
Date of Acquisition
Shares Issued
Company A April 1, 2005 50,000
Company B July 1, 2005 80,000
Company C October 1, 2005 30,000
On May 14, 2005, Lennon realized a $90,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 1994. On December 31, 2005, Lennon recorded net income of $300,000 before tax and exclusive of the gain.
Instructions
Assuming a 50% tax rate, compute the earnings per share (rounded to the nearest penny) data that should appear on the financial statements of Lennon Industries as of December 31, 2005. Assume that the expropriation is extraordinary.
On January 1, 2005, Lennon Industries had stock outstanding as follows.
6% Cumulative preferred stock $100 par value
issued and outstanding 10,000 shares $1,000,000
Common stock, $10 par value, issued and
outstanding 200,000 shares 2,000,000
To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 160,000 common shares. The acquisitions took place as follows.
Date of Acquisition
Shares Issued
Company A April 1, 2005 50,000
Company B July 1, 2005 80,000
Company C October 1, 2005 30,000
On May 14, 2005, Lennon realized a $90,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 1994. On December 31, 2005, Lennon recorded net income of $300,000 before tax and exclusive of the gain.
Instructions
Assuming a 50% tax rate, compute the earnings per share (rounded to the nearest penny) data that should appear on the financial statements of Lennon Industries as of December 31, 2005. Assume that the expropriation is extraordinary.