E4-13 (Earnings Per Share) at December 31, 2014, Shiga Naoya Corporation Had the Following

E4-13 (Earnings per Share) At December 31, 2014, Shiga Naoya Corporation had the following stock

outstanding.

8% cumulative preference shares, $100 par, 107,500 shares $10,750,000

Ordinary shares, $5 par, 4,000,000 shares 20,000,000

During 2015, Shiga Naoya did not issue any additional common stock. The following also occurred during

2015.

Income from continuing operations before taxes $21,650,000

Discontinued operations (loss before taxes) $ 3,225,000

Preferred dividends declared $860,000

Common dividends declared $ 2,200,000

Effective tax rate 35%

Instructions

Compute earnings per share data as it should appear in the 2015 income statement of Shiga Naoya Corporation.

(Round to two decimal places.)

5EXERCISE 4-13 (15–20 minutes)

Net income:
Income before income tax...... / €21,650,000
Income tax (35% X €21,650,000)...... / 7,577,500
Income from continuing operations...... / 14,072,500
Discontinued operations
Loss before income tax...... / €3,225,000
Less: Applicable income tax (35%)...... / 1,128,750 / (2,096,250)
Net income...... / €11,976,250
Preference dividends declared:...... / € 860,000
Weighted average shares outstanding...... / 4,000,000
Earnings per share
Income from continuing operations...... / €3.30*
Discontinued operations, net of tax...... / (0.52)**
Net income...... / €2.78***

*(€14,072,500 – €860,000) ÷ 4,000,000. (Rounded)

**€2,096,250 ÷ 4,000,000. (Rounded)

***(€11,976,250 – €860,000) ÷ 4,000,000.

E4-17 (Various Reporting Formats) The following information was taken from the records of Roland

Carlson Inc. for the year 2015. Income tax applicable to income from continuing operations $119,000;

income tax applicable to loss on discontinued operations $25,500; and unrealized holding gain on non-trading equity securities $15,000.

Gain on sale of plant assets $ 95,000 Cash dividends declared $ 150,000

Loss on discontinued operations 75,000 Retained earnings January 1, 2015 600,000

Administrative expenses 240,000 Cost of goods sold 850,000

Rent revenue 40,000 Selling expenses 300,000

loss on impairment of land 60,000 Sales revenue 1,700,000

Shares outstanding during 2015 were 100,000.

Instructions

(a) Prepare a comprehensive income statement for 2015, using the one statement format.

(b) Prepare a retained earnings statement for 2015.

3 8

4EXERCISE 4-17 (30–35 minutes)

(a)VEGA INC.
Statement of Comprehensive Income
For the Year Ended December 31, 2015
Sales...... / R$1,700,000
Cost of goods sold...... / 850,000
Gross profit...... / 850,000
Selling expenses...... / R$300,000
Administrative expenses...... / 240,000 / 540,000
Other income and expense
Gain on sale of plant assets...... / 95,000
Rent revenue...... / 40,000
Loss on impairment of land...... / (60,000) / 75,000
Income before income tax...... / 385,000
Income tax...... / 119,000
Income from continuing operations...... / 266,000
Discontinued operations
Loss on discontinued operations...... / R$ 75,000
Less: Applicable income tax reduction..... / 25,500 / (49,500)
Net income...... / 216,500
Other comprehensive income
Unrealized holding gain...... / 15,000
Comprehensive income...... / R$231,500
Earnings per share:
Income from continuing operations
(R$266,000 ÷ 100,000)...... / R$2.66
Loss on discontinued operations, net of tax...... / (0.49)
Net income (R$216,500 ÷ 100,000)...... / R$2.17
(b)VEGA INC.
Retained Earnings Statement
For the Year Ended December 31, 2015
Retained earnings, January 1...... / R$600,000
Add: Net income...... / 216,500
816,500
Less: Dividends declared...... / 150,000
Retained earnings, December 31...... / R$666,500

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