a. Explanation Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement. Prepare the income statement of Incorporation B for the year ended December 31, 2015, along with the earnings per share data . Incorporation B Income Statement For the Year Ended December 31, 2015 Net sales $37,400,000 Costs and expenses (including applicable income tax) 21,500,000 Income from continuing operations 15,900,000 Discontinued operations: Operating income (net of income tax) $205,000 Loss on disposal (net of income tax benefit) (510,000) (305,000) Income before extraordinary items 15,595,000 Extraordinary loss (net of income tax benefit) (930,000) Net income $14,665,000 Earnings per share of common stock: Earnings from continuing operations $76.500 Loss from discontinued operations (1.525) Earnings before extraordinary items 74.975 Extraordinary loss (4.650) Net income $70.325 Table (1) Working Notes: Calculate earnings per share of income from continuing operations . Step 1: Compute the amount of cash dividends on preferred stock . Preferred dividends = { Number of shares × Dividend per share } = 100 , 000 shares × $ 6 per share = $ 600 , 000 (1) Step 2: Calculate earnings per share of income from continuing operations. Earnings per share= ( Income from continuing operations– Preferred dividends ) Weighted average number of common shares = $15,900,000–$600,000 200,000 shares =$76 .50 Note: Refer to the income statement for the value of income from continuing operations, and Equation (1) for value of preferred dividends b. To determine Prepare statement of retained earnings of Incorporation B for the year ended December 31, 2015. c. To determine Compute the amount of common dividend per share. d. To determine Discuss whether the $75.00 EPS in 2016 is favorable or unfavorable to the same figure in 2015, and in comparison to $76.50 (Refer Table-1) in 2015.

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ISBN: 9780078025778

Author: Jan Williams, Susan Haka, Mark S Bettner, Joseph V Carcello

Publisher: McGraw-Hill Education

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Question

Chapter 12, Problem 2BP

To determine

Prepare the income statement of Incorporation B for the year ended December 31, 2015, along with the earnings per share data.

To determine

Prepare statement of retained earnings of Incorporation B for the year ended December 31, 2015.

To determine

Compute the amount of common dividend per share.

To determine

Discuss whether the $75.00 EPS in 2016 is favorable or unfavorable to the same figure in 2015, and in comparison to $76.50 (Refer Table-1) in 2015.

Expert Solution & Answer

Chapter 12 Solutions

Financial & Managerial Accounting

Ch. 12 - Prob. 1STQ Ch. 12 - 2. Which of the following situations would not be...Ch. 12 - Prob. 3STQ Ch. 12 - Prob. 4STQ Ch. 12 - Prob. 5STQ Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ

Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ Ch. 12 - Prob. 11DQ Ch. 12 - Prob. 12DQ Ch. 12 - Prob. 13DQ Ch. 12 - Prob. 14DQ Ch. 12 - Prob. 15DQ Ch. 12 - Prob. 1BE Ch. 12 - Prob. 2BE Ch. 12 - Prob. 3BE Ch. 12 - Prob. 4BE Ch. 12 - Prob. 5BE Ch. 12 - BRIEF EXERCISE 12.6 Statement of Retained...Ch. 12 - Prob. 7BE Ch. 12 - Prob. 8BE Ch. 12 - Prob. 9BE Ch. 12 - Prob. 10BE Ch. 12 - Prob. 1E Ch. 12 - Prob. 2E Ch. 12 - Prob. 3E Ch. 12 - EXERCISE 12.4 Reporting Discontinued...Ch. 12 - Prob. 5E Ch. 12 - Prob. 6E Ch. 12 - Prob. 7E Ch. 12 - Prob. 8E Ch. 12 - Prob. 9E Ch. 12 - Prob. 10E Ch. 12 - Prob. 11E Ch. 12 - Prob. 12E Ch. 12 - EXERCISE 12.13 Cash and Stock Dividends Kosmier...Ch. 12 - Prob. 14E Ch. 12 - Prob. 15E Ch. 12 - Prob. 1AP Ch. 12 - Prob. 2AP Ch. 12 - Prob. 3AP Ch. 12 - Prob. 4AP Ch. 12 - Prob. 5AP Ch. 12 - Prob. 6AP Ch. 12 - Prob. 7AP Ch. 12 - Prob. 8AP Ch. 12 - Prob. 9AP Ch. 12 - Prob. 1BP Ch. 12 - Prob. 2BP Ch. 12 - Prob. 3BP Ch. 12 - Prob. 4BP Ch. 12 - Prob. 5BP Ch. 12 - Prob. 6BP Ch. 12 - Prob. 7BP Ch. 12 - Prob. 8BP Ch. 12 - Prob. 9BP Ch. 12 - Prob. 1CTC Ch. 12 - Prob. 2CTC Ch. 12 - Prob. 3CTC Ch. 12 - Prob. 4CTC Ch. 12 - Prob. 5CTC Ch. 12 - Prob. 6CTC Ch. 12 - Prob. 7CTC

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