Oriole 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 $$1,788,000$ and income

from continuing operations for the fiscal year ended May $31,2026,$ was $$2,381,000.$ In both years, the company incurred a $11\%$

interest expense on $$2,497,000$ of debt, an obligation that requires interest$-$only payments for $5$ years. The company experienced a

loss from discontinued operations of $$611,000$ in February $2026.$ The company uses a $20\%$ effective tax rate for income taxes.

The capital structure of Oriole Corporation on June $1,2024,$ consisted of $978,000$ shares of common stock outstanding

and $19,700$ shares of $$50$ par 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 $1,2024,$ Oriole sold an additional $477,000$ shares of the common stock at $$20$ per share. Oriole distributed a $20\%$ stock

dividend on the common shares outstanding on January $1,2025.$ On December $1,2025,$ Oriole was able to sell an

additional $796,000$ shares of the common stock at $$22$ per share. These were the only common stock transactions that occurred

during the $2$ fiscal years.

$($a$)$

Your answer is correct.

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

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Solution

Attempts: $2$ of $5$ used

$($b$)$

Your answer is incorrect.

Determine the weighted$-$average number of shares that Oriole Corporation would use in calculating earnings per share for the

fiscal year ended:

Weighted$-$average number of shares

May $31,2025$

May $31,2026$