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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
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