Chapter 14, Problem 14.3BYP

(a)

To determine

Financial Statements: The statement prepared for the specific period which comprises the financial information of the organization. It includes a statement of income which shows the profitability of the business, balance sheet which shows the financial position in the terms of assets, liabilities, and capital, and cash flow statement which represents the cash flows for the accounting period.

Earnings per Share (EPS): The part of profit earned by each share of the Company is called as earning per share. It reveals the profitability of the Company. To calculate earnings per share net income is divided by average number of outstanding shares.

Dividend: The amount that shareholders receive in return of their investment is called as dividend. The distribution of net income of the Company to the shareholders in return of their investment is the dividend.

To determine: The basic earnings per share for both Company A and Company W

(b)

To determine

The amount of dividend paid by Company A on December 31, 2013 and Company W on January 31, 2014.