Question
Bramble Corporation is preparing the comparative financial statements to be included in the annual report to stockholders. Bramble employs a fiscal year ending May 31.
Bramble Corporation is preparing the comparative financial statements to be included in the annual report to stockholders. Bramble employs a fiscal year ending May 31. Income from operations before income taxes for Bramble was $1,387,000 and $602,000, respectively, for fiscal years ended May 31, 2018 and 2017. Bramble experienced a loss from discontinued operations of $375,000 on March 3, 2018. A 40% combined income tax rate pertains to any and all of Bramble Corporations profits, gains, and losses. Brambles capital structure consists of preferred stock and common stock. The company has not issued any convertible securities or warrants and there are no outstanding stock options. Bramble issued 36,200 shares of $100 par value, 7% cumulative preferred stock in 2014. All of this stock is outstanding, and no preferred dividends are in arrears. There were 1,042,800 shares of $1 par common stock outstanding on June 1, 2016. On September 1, 2016, Bramble sold an additional 385,200 shares of the common stock at $16 per share. Bramble distributed a 20% stock dividend on the common shares outstanding on December 1, 2017. These were the only common stock transactions during the past 2 fiscal years.
Determine the weighted-average number of common shares that would be used in computing earnings per share on the current comparative income statement for:
1.The year end May 31, 2017
2. The year end May 31, 2018
Starting with income from operations before income taxes, prepare a comparative income statement for the years ended May 31, 2018 and 2017. The statement will be part of Bramble Corporations annual report to stockholders and should include appropriate earnings per share presentation.
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