The capital structure of Lockridge-Priest Air Conditioning, Inc., at December 31, 19X6, included 20,000 shares of \(\$ 1.25\) preferred stock and 44,000 shares of common stock. Common shares outstanding during \(19 \times 7\) were 44,000 January through May, 50,000 June through August, and 60,500 September through December. Income from continuing operations during 19X7 was \(\$ 81,100\). The company discontinued a segment of the business at a gain of \(\$ 6,630\), and an extraordinary item generated a loss of \(\$ 33,660\). Lockridge-Priest's board of directors restricts \(\$ 80,000\) of retained earnings for contingencies.

\section*{Required}

1. Compute Lockridge-Priest's earnings per share. Start with income from continuing operations. Income and loss amounts are net of income tax.

2. Show two ways of reporting Lockridge-Priest's retained earnings restriction. Retained earnings at December 31, 19X6, was \(\$ 107,000\), and total paid-in capital at December \(31,19 \mathrm{X} 7\), is \(\$ 314,000\). Lockridge-Priest declared cash dividends of \(\$ 29,000\) during 19X7.