E16-20 (EPS: Simple Capital Structure)
On January 1, 2010, Bailey Industries had stock outstanding as follows.
|
6% Cumulative preferred stock $100 par value issued and outstanding 10,000 shares |
1,000,000 |
|
Common stock, $10 par value, issued and outstanding 200,000 shares |
2,000,000 |
To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional 170,000 common shares. The acquisitions took place as follows.
|
Date of Acquisition |
Shares |
Issued |
|
Company |
A April 1, 2010 |
60,000 |
|
Company B |
July 1, 2010 |
80,000 |
|
Company C |
October 1, 2010 |
30,000 |
On May 14, 2010, Bailey realized a $90,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.
On December 31, 2010, Bailey recorded net income of $300,000 before tax and exclusive of the gain.
Assuming a 40% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2010. Assume that the expropriation is extraordinary.