Kingbird Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May $31,2025,$ and May $31,2026.$ The income from operations for the fiscal year ended May $31,2025,$ was $$1,827,000$ and income from continuing operations for the fiscal year ended May $31,2026,$ was $$2,536,000.$ In both years, the company incurred a $10\%$ interest expense on $$2,376,000$ of debt, an obligation that requires interest$-$only payments for $5$ years. The company experienced a loss from discontinued operations of $$585,000$ in February $2026.$ The company uses a $20\%$ effective tax rate for income taxes.

The capital structure of Kingbird Corporation on June $1,2024,$ consisted of $1,018,000$ shares of common stock outstanding and $19,200$ shares of $$50$ par value, $7\%,$ cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities$,$ options, or warrants.

On October $1,2024,$ Kingbird sold an additional $507,000$ shares of the common stock at $$20$ per share. Kingbird distributed a $20\%$ stock dividend on the common shares outstanding on January $1,2025.$ On December $1,2025,$ Kingbird was able to sell an additional $817,000$ shares of the common stock at $$22$ per share. These were the only common stock transactions that occurred during the $2$ fiscal years.

$($a$)$

Identify whether the capital structure at Kingbird Corporation is a simple or complex capital structure.

$($b$)$

Determine the weighted$-$average number of shares that Kingbird Corporation would use in calculating earnings per share for the fiscal year ended:

Weighted$-$average number of shares

May $31,2025$

May $31,2026$

$($c$)$

Prepare, in good form, a comparative income statement, beginning with income from operations, for Kingbird Corporation for the fiscal years ended May $31,2025,$ and May $31,2026.$ This statement will be included in Kingbird's annual report and should display the appropriate earnings per share presentations. $($Round earnings per share to $2$ decimal places, e$.$g$.1\mathrm{.}55.)$

KINGBIRD CORPORATION Comparative Income Statement

For Fiscal Years Ended May $31,2025$ and $2026$

$2025$

$2026$

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$q,$

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Earnings per share:

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