Compute the earnings per share on common stock

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Reference no: EM132461431

Problem - A portion of the combined statement of income and retained earnings of Metlock Inc. for the current year follows.

Income before extraordinary item

 

$15,080,000

 

Loss from discontinued operations, net of applicable income tax (Note 1)

 

1,310,000

 

Net income

 

13,770,000

Retained earnings at the beginning of the year

 

82,660,000

 

 

 

96,430,000

Dividends declared:

 

 

On preferred stock-$6.00 per share

$318,000

 

 

On common stock-$1.75 per share

14,980,000

15,298,000

Retained earnings at the end of the year

 

$81,132,000

Note - During the year, Metlock Inc. suffered a major loss from discontinued operations of $1,310,000 after applicable income tax reduction of $1,230,000.

At the end of the current year, Metlock Inc. has outstanding 8,450,000 shares of $10 par common stock and 53,000 shares of 6% preferred. On April 1 of the current year, Metlock Inc. issued 1,000,000 shares of common stock for $32 per share to help finance the loss from discontinued operations.

Required - Compute the earnings per share on common stock for the current year as it should be reported to stockholders.

Reference no: EM132461431

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