Earnings per share: Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’. The following formula can be used to calculate earnings per share: Earnings per share = Net income ( loss ) – Preferred dividends Average number of common shares outstanding To compute: Earnings per share of Incorporation A and company W.

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Answer 1

Question

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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The stockholders' equity at the beginning of the period was $212,000; at the end of the period, assets were $305,000 and liabilities were $70,000. If the owner made no additional investments or paid no dividends during the period, did the business incur a net income or a net loss for the period, and how much?

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In a certain standard costing system, the following results occurred last period: total labor variance, 3200 F; labor efficiency variance, 4,300 F; and the actual labor rate was $0.35 more per hour than the standard labor rate. The number of direct labor hours used last period was __.

Answer 2

Question

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Expert Solution & Answer

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Answer 3

Question

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 6

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

Answer 7

Chapter 12, Problem 12.1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding

To compute: Earnings per share of Incorporation A and company W.

Answer 8

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

Answer 9

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

Answer 10

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 11

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

Ch. 12 - Of two corporations organized at approximately the...Ch. 12 - A stockbroker advises a client to buy preferred...Ch. 12 - A corporation with both preferred stock and common...Ch. 12 - An owner of 2,500 shares of Simmons Company common...Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - A corporation reacquires 60,000 shares of its own...Ch. 12 - The treasury stock in Discussion Question 7 is...Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ

Solution Summary: The author explains how to calculate earnings per share of Incorporation A and company W.

To identify: The company which appears to be more profitable on the basis of earnings per share.

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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Chapter 12 Solutions