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16 October, 09:35

At December 31, 2019, Oriole Corporation had the following stock outstanding. 10% cumulative preferred stock, $100 par, 109,261 shares $10,926,100 Common stock, $5 par, 4,099,840 shares 20,499,200 During 2020, Oriole did not issue any additional common stock. The following also occurred during 2020. Income from continuing operations before taxes $24,649,800 Discontinued operations (loss before taxes) $3,399,100 Preferred dividends declared $1,092,610 Common dividends declared $2,322,900 Effective tax rate 35 % Compute earnings per share data as it should appear in the 2020 income statement of Oriole Corporation.

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  1. 16 October, 09:53
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    The company should report the 03 EPS figures on its 2020 income statement:

    EPS continuing operations = $3.64

    EPS discontinued operations = $ (0.54)

    EPS net income = EPS continuing operations + EPS discontinued operations = $3.10

    Explanation:

    * Calculation in EPS continuing operations:

    EPS continuing operations = (Net income from continuing operation - preferred dividend) / No. of common shares outstanding

    in which: Net income from continuing operation = Income from continuing operations before taxes * (1 - tax rate) = 24,649,800 * (1-35%) = $16,022,370

    preferred dividend = $1,092,610

    No. of common shares outstanding = 4,099,840

    EPS continuing operations = ($16,022,370 - $1,092,610) / 4,099,840 = $3.64

    * Calculation in EPS discontinued operations:

    EPS discontinued operations = Net income from discontinuing operation / No. of common shares outstanding

    in which: Net income from continuing operation = Income from discontinuing operations before taxes * (1 - tax rate) = (3,399,100) * (1-35%) = $ (2,209,415)

    No. of common shares outstanding = 4,099,840

    EPS discontinued operations = (2,209,415) / 4,099,840 = $ (0.54)
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