TR20-7 EPS-Complex Capital Structure

Kouk Corp. has the following capital structure at the end of 20X7:

• 100,000 Class A shares carrying five votes per share.
• 100,000 Class B shares, carrying one vote per share.
• Dividends are shared on a 5:1 ratio$5 to Class A for every dollar paid to Class B.

Additional information:

• Kouk Corp.s tax rate is 20%.
• Net earnings amounted to $2,100,000 for 20X7; there were no discontinued operations.
• Kouk paid $1,200,000 in dividends at the end of 20X7.

Required: 1. Determine the amount of dividends that were paid to Class A and Class B shares, both in total and per share for each class.

2. Calculate basic EPS