24 January, 13:04

# Elite Trailer Parks has an operating profit of \$250,000. Interest expense for the year was \$32,000; preferred dividends paid were \$32,700; and common dividends paid were \$38,300. The tax was \$63,500. The firm has 24,100 shares of common stock outstanding.a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)b. What was the increase in retained earnings for the year?

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1. 24 January, 13:10
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a. \$5.05 per share, \$1.59 per share

b. \$83,500

Explanation:

a. Earning per share = (Net income - preference dividend) : (Number of shares)

where,

Net income = Operating profit - interest expense - income tax expense

= \$250,000 - \$32,000 - \$63,500

= \$154,500

And, the other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= (\$154,500 - \$32,700) : (24,100 shares)

= \$5.05 per share

Dividend per share = (common dividend) : (number of shares)

= (\$38,300) : (24,100 shares)

= \$1.59 per share

b. The computation of the increase in retained earning is shown below

= Operating profit - interest expense - preferred dividends paid - common dividends paid - income tax expense

= \$250,000 - \$32,000 - \$32,700 - \$38,300 - \$63,500

= \$83,500