Exercise 1-23 (Algo) Reporting Income LO 1-5

On July 1, 20X2, Alan Enterprises merged with Terry Corporation through an exchange of stock and the subsequent liquidation of Terry. Alan issued 238,000 shares of its stock to effect the combination. The book values of Terrys assets and liabilities were equal to their fair values at the date of combination, and the value of the shares exchanged was equal to Cherrys book value. Information relating to income for the companies is as follows:

20X1January 1June 30, 20X2July 1December 31, 20X2Net Income:Alan Enterprises$ 4,510,000$ 2,600,000$ 3,698,000Terry Corporation1,330,000862,000

Alan Enterprises had 1,030,000 shares of stock outstanding prior to the combination. Remember that when calculating earnings per share (EPS) for the year of the combination, the shares issued in the combination were not outstanding for the entire year.

Required:

Compute the net income and earnings-per-share amounts that would be reported in Alan's 20X2 comparative income statements for both 20X2 and 20X1.

Note: Round earnings per share to 2 decimal places.