Kouk Corp. has the following capital structure at the end of 20X7: 100,000 Class A shares
Question:
Kouk Corp. has the following capital structure at the end of 20X7:
• 100,000 Class A shares carrying five votes per share.
• 100,000 Class B shares, carrying one vote per share.
• Dividends are shared on a 5:1 ratio—$5 to Class A for every dollar paid to Class B.
Additional information:
• Kouk Corp.’s tax rate is 20%.
• Net earnings amounted to $2,100,000 for 20X7; there were no discontinued operations.
• Kouk paid $1,200,000 in dividends at the end of 20X7.
Required:
1. Determine the amount of dividends that were paid to Class A and Class B shares, both in total and per share for each class.
2. Calculate basic EPS.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel