Exercise 16-20 Your answer is partially correct. Try again. On January 1, 2020, Crane Industries had stock outstanding as follows.6% Cumulative preferred stock, $100 par value, issued and outstanding 9,800 shares $980,000Common stock, $10 par value, issued and outstanding 206,000 shares 2,060,000To acquire the net assets of three smaller companies, Crane authorized the issuance of an additional 158,400 common shares. The acquisitions took place as shown below.Date of Acquisition Shares IssuedCompany A April 1, 2020 48,000Company B July 1, 2020 80,400Company C October 1, 2020 30,000On May 14, 2020, Crane realized a $88,800 (before taxes) insurance gain on discontinued operations. On December 31, 2020, Crane recorded income of $274,800 from continuing operations (after tax).Assuming a 25% tax rate, compute the earnings per share data that should appear on the financial statements of Crane Industries as of December 31, 2020. (Round answer to 2 decimal places, e.g. $2.55.)

Earning Per Share (EPS): It shows how much money a company can distribute from the earnings to its shareholders per share. It can be computed by the net profit by the number of common shares outstanding. Particulars Amount Income from continuing operations 2,74,800 Add: Tax @25% (2,74,800*25/75) 91600 Income from continuing operation before tax (2,74,800*100/80) 3,66,400 Add: Extraordinary Gain 88800 Total Income 455,200 Less: Tax @25% 1,13,800 Income after tax 3,41,400 Less: Preference Dividend (9800*100*6%) 58800 Net profit available to equity shareholders 2,82,600 Particulars No. of shares Date of Issue Held For Months The weighted average number of shares Opening shares 206000 12 206000 Company A 48000 01-04-2020 9 36000 Company B 80400 01-07-2020 6 40200 Company C 30,000 01-10-2020 3 7500 Total 289700EPS=Net profit attributable to common stockholdersWeighted average number of shares outstanding =2,82,600/289700 =0.975 or $0.98 per share

Answered: Exercise 16-20 Your answer is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 16-20


	Your answer is partially correct. Try again.

On January 1, 2020, Crane Industries had stock outstanding as follows.

6% Cumulative preferred stock, $100 par value, issued and outstanding 9,800 shares		$980,000
Common stock, $10 par value, issued and outstanding 206,000 shares		2,060,000

To acquire the net assets of three smaller companies, Crane authorized the issuance of an additional 158,400 common shares. The acquisitions took place as shown below.

Date of Acquisition		Shares Issued
Company A April 1, 2020		48,000
Company B July 1, 2020		80,400
Company C October 1, 2020		30,000

On May 14, 2020, Crane realized a $88,800 (before taxes) insurance gain on discontinued operations. On December 31, 2020, Crane recorded income of $274,800 from continuing operations (after tax).

Assuming a 25% tax rate, compute the earnings per share data that should appear on the financial statements of Crane Industries as of December 31, 2020. (Round answer to 2 decimal places, e.g. $2.55.)

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