1)Match each item/event pair below with the indicated change in the item. An individual classification may be used more than once, or not at all. For each dividend, assume that both declaration and payment or distribution has occurred.

Classifications

A. Item increases

B. Item decreases

C. Item is unchanged

D. Direction of change cannot be determined [10]

Item Event

____ 1. Book value per share Stock dividend

____ 2. Legal capital per common share Cash dividend

____ 3. Total retained earnings Stock split

____ 4. Total shareholders' equity Prior period adjustment increases

last year's net income

____ 5. Earnings per common share Restriction of retained earnings

____ 6. Total retained earnings Change in accounting principle

____ 7. Number of common shares issued Stock dividend

____ 8. Total retained earnings Cash dividend

____ 9. Total contributed capital Stock dividend

____ 10. Legal capital per common share Stock dividend

2)a)Marie's Swimsuit Company had 60,000 common shares outstanding. The company has no preferred shares but paid a $2 per share dividend to all common shareholders. If net income was $240,000, earnings per share equals

$_________________________. [6]

b) ABC Industries had 500,000 common shares and 10,000 preferred shares throughout 2002. The preferred shares are not cumulative and received dividends of $240,000 for the year. If net income was $600,000, earnings per share equals

$ _ .

c) Morgan Corporation declared, but had not yet paid, dividends on the 10,000 shares of $2 no par value cumulative preferred shares, issued at $10 per share The number of common shares and net income for the year were 30,000 shares and $110,000, respectively. Earnings per share equals

$ _ .