Question

At December 31, 2019, Concord Corporation had the following stock outstanding.

10% cumulative preferred stock, $100 par, 107,956 shares $10,795,600
Common stock, $5 par, 4,068,220 shares 20,341,100
During 2020, Concord did not issue any additional common stock. The following also occurred during 2020.
Income from continuing operations before taxes $22,234,700
Discontinued operations (loss before taxes) $3,457,200
Preferred dividends declared $1,079,560
Common dividends declared $2,404,100
Effective tax rate 35%
Compute earnings per share data as it should appear in the 2020 income statement of Concord Corporation.

Answer 1

Concord Corporation

Income Statement

31-Dec-20

Particulars Amount

Net Income:

Income from continuing operation $22,234,700

before income tax

Income Tax (35%) $7,782,145

Income from continuing operation $14,452,555

Discontinued operations

Losses before taxes $3,457,200.00

Less: Income tax (35%) $1,210,020.00 $2,247,180

Net Income $12,205,375

Preferred dividend declared $1,079,560

Weighted average common share outstanding 4,068,220

Earning per share = Income from continuing operation - Discontinued operation, net of tax

Where Income from continuing operation = ($14,452,555 - $1,079,560) / 4068220 = $3.29. Discontinued operation, net of tax = ($2,247,180/4068220) = -$0.55

Earning per share = $3.29 - $0.55

Earning per share = $2.74