Question
MeltonCorporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021.
MeltonCorporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,800,000and income from continuing operations for the fiscal year ended May 31, 2021, was $2,500,000. In both years, the company incurred a10% interest expense on $2,400,000of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $600,000on February 2021. The company uses a20% effective tax rate for income taxes.
The capital structure ofMeltonCorporation on June 1, 2019, consisted of1,000,000shares of common stock outstanding and20,000shares of $50par value,6%, 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, 2019,Meltonsold an additional500,000shares of the common stock at $20per share.Meltondistributed a20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020,Meltonwas able to sell an additional800,000shares of the common stock at $22per share. These were the only common stock transactions that occurred during the two fiscal years.
Identify whether the capital structure atMeltonCorporation is a simple or complex capital structure.
Simple Capital Structure
Complex Capital Structure
eTextbook and Media
Determine the weighted-average number of shares thatMeltonCorporation would use in calculating earnings per share for the fiscal year ended:
Weighted-average number of shares(1)May 31, 2020
(2)May 31, 2021
eTextbook and Media
Prepare, in good form, a comparative income statement, beginning with income from operations, forMeltonCorporation for the fiscal years ended May 31, 2020, and May 31, 2021. This statement will be included inMelton's annual report and should display the appropriate earnings per share presentations.(Round earnings per share to 2 decimal places, e.g. $1.55.)
MELTONCORPORATION
Comparative Income Statement
For Fiscal Years Ended May 31, 2020 and 2021
2020
2021
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
$
$
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
$
$
Earnings per share:
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
$
$
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
Dividends
Expenses
Extraordinary Loss
Income Before Extraordinary Loss
Income Before Taxes
Interest Expense
Income From Continuing Operations
Income From Operations
Income Taxes
Loss From Discontinued Operations
Net Income / (Loss)
Retained Earnings, June 1
Retained Earnings, May 31
Revenues
Total Expenses
Total Revenues
$
$
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele
10th edition
9780077515904, 007802529X, 77515900, 978-0078025297
