On January 1 2011 Lui Limited had shares outstanding as
On January 1, 2011, Lui Limited had shares outstanding as follows:
6% cumulative preferred shares, $100 par value,
10,000 shares issued and outstanding ..........$1,000,000
Common shares, 200,000 shares issued and outstanding...2,000,000
To acquire the net assets of three smaller companies, the company authorized the issuance of an additional 330,000 common shares. The acquisitions were as follows:
Date of Acquisition Shares Issued
Company A: April 1, 2011 .......... 190,000
Company B: July 1, 2011 .......... 100,000
Company C: October 1, 2011 ....... 40,000
On May 14, 2011, Lui realized a $97,000 gain (before taxes) on a discontinued operation from a business segmentthat had originally been purchased in 1994.
On December 31, 2011, the company recorded income of $680,000 before tax and not including the discontinuedoperation gain. Lui has a 50% tax rate.
(a) Calculate the earnings per share data that should appear on the company’s financial statements as at December 31,2011.
(b) What determines that Lui has a simple capital structure?
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