CindyG
Apr 28, 2009, 07:45 PM
I am working on a question that has been answered and want to know how to obtain it. It has to do woth Simple Capital Structure and the name of the company is Lennon Industries.
The question is this:
On January 1, 2008, Lennon Industires had stock outstanding as follows.
6% Cumulative prefereed stock, $100 par value issued and outstanding 10,000 shares $1 million
Common stock, $10 par value, issued and outstanding 200,000 shares 2 million
To acquire the net assets of the three smaller companies, Lennon authorized the issuance of an additional 160,000 common shares. The acquisitions took place as shown below.
Date of acquistion Shares issued
Company A April 1,2008 50,000
Company B July 1, 2008 80,000
Company C Oct 1, 2008 30,000
On May 14 2008 Lennon realized a 90,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 1994
On December 31,2008 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 data that should apear on the financial statements of Lennon Industries as of Dec 31, 2008. Assume that the expropriation is extraordinary.
This is what I have set up so far:
Income before income tax and extraordinary items
Income taxes
Income before extraordinary item
Extraordinary gain, net of applicable income tax
Net income
Per share of common stock:
Income before extraordinary item
Extraordinary gain, net of tax
Net Income
I am just not sure what numbers to use at this point to make this work
Dates Outstanding Shares Outstanding Fraction of Year Weighted Shares
Jan 1 - Apr 1 200000
Apr 1 - Jul 1
Jul 1 - Oct 1
Oct 1 - Dec 31
Weighted average number of shares outstanding
The question is this:
On January 1, 2008, Lennon Industires had stock outstanding as follows.
6% Cumulative prefereed stock, $100 par value issued and outstanding 10,000 shares $1 million
Common stock, $10 par value, issued and outstanding 200,000 shares 2 million
To acquire the net assets of the three smaller companies, Lennon authorized the issuance of an additional 160,000 common shares. The acquisitions took place as shown below.
Date of acquistion Shares issued
Company A April 1,2008 50,000
Company B July 1, 2008 80,000
Company C Oct 1, 2008 30,000
On May 14 2008 Lennon realized a 90,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 1994
On December 31,2008 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 data that should apear on the financial statements of Lennon Industries as of Dec 31, 2008. Assume that the expropriation is extraordinary.
This is what I have set up so far:
Income before income tax and extraordinary items
Income taxes
Income before extraordinary item
Extraordinary gain, net of applicable income tax
Net income
Per share of common stock:
Income before extraordinary item
Extraordinary gain, net of tax
Net Income
I am just not sure what numbers to use at this point to make this work
Dates Outstanding Shares Outstanding Fraction of Year Weighted Shares
Jan 1 - Apr 1 200000
Apr 1 - Jul 1
Jul 1 - Oct 1
Oct 1 - Dec 31
Weighted average number of shares outstanding