On December 31, 2017, Ainsworth, Inc., had 600 million shares of common stock outstanding. Twenty millionshares of 8%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cashdividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $140million, including an after-tax loss from discontinued operations of $400 million.Required:1. Determine Ainsworth’s net loss per share for the year ended December 31, 2018.2. Determine the per share amount of income or loss from continuing operations for the year ended December31, 2018.3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth’s 2018 and 2017 comparativeincome statements. Assume EPS was reported in 2017 as $0.75, based on net income (no discontinued operations) of $450 million and a weighted-average number of common shares of 600 million.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
On December 31, 2017, Ainsworth, Inc., had 600 million shares of common stock outstanding. Twenty million
shares of 8%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April
30, 2018, Ainsworth purchased 30 million shares of its common stock as
dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $140
million, including an after-tax loss from discontinued operations of $400 million.
Required:
1. Determine Ainsworth’s net loss per share for the year ended December 31, 2018.
2. Determine the per share amount of income or loss from continuing operations for the year ended December
31, 2018.
3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth’s 2018 and 2017 comparative
income statements. Assume EPS was reported in 2017 as $0.75, based on net income (no discontinued operations) of $450 million and a weighted-average number of common shares of 600 million.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 12 images
