The following data relate to the operations of Slick Software, Inc., during 2011. Continuing operations: Net sales

Question:

The following data relate to the operations of Slick Software, Inc., during 2011.

Continuing operations:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,850,000

Costs and expenses (including applicable income tax) . . . . . . . . . . . . . . . . . 16,900,000

Other data:

Operating income during 2011 on segment of the business

discontinued near year-end (net of income tax) . . . . . . . . . . . . . . . . . . . . . 140,000

Loss on disposal of discontinued segment (net of income

tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550,000

Extraordinary loss (net of income tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . 900,000

Prior period adjustment (increase in 2010 depreciation

expense, net of income tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000

Cash dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950,000

Instructions

a. Prepare a condensed income statement for 2011, including earnings per share figures. Slick Software, Inc. had 200,000 shares of $1 par value common stock and 80,000 shares of $6.25, $100 par value preferred stock outstanding throughout the year.

b. Prepare a statement of retained earnings for the year ended December 31, 2011. As originally reported, retained earnings at December 31, 2010, amounted to $7,285,000.

c. Compute the amount of cash dividend per share of common stock declared by the board of directors for 2011. Assume no dividends in arrears on the preferred stock.

d. Assume that 2012 earnings per share is a single figure and amounts to $8.00. Assume also that there are no changes in outstanding common or preferred stock in 2012. Do you consider the $8.00 earnings per share figure in 2012 to be a favorable or unfavorable statistic in comparison with 2011 performance? Explain.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...