The capital structure of Renault Marketing Inc. at December 31, 2013, included 50,000 $0.50 preferred shares and 74,000 common shares. The 50,000 preferred shares were issued in 2006. Common shares outstanding during 2014 were 74,000 January through April and 80,000 May through September. A 20-percent stock dividend was paid on October 1. Income from continuing operations during 2014 was $122,000. The company discontinued a segment of the business at a gain (net of tax) of $9,250. The Renault Marketing Inc. board of directors restricts $125,000 of retained earnings for contingencies.

Required

1. Compute Renault Marketing Inc.'s earnings per share. Start with income from continuing operations. Income of $122,000 is net of income tax.

2. Show two ways of reporting Renault Marketing Inc.'s retained earnings restriction. Retained Earnings at December 31, 2013, was $145,500, and total contributed capital at December 31, 2014, is $375,000. The company declared dividends of $49,500 in 2014.