Shown below are data relating to the operations of Beach, Inc., during 2011.

Continuing operations:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,400,000

Costs and expenses (including applicable income taxes) . . . . . . . . . . . . . . . 21,500,000

Other data:

Operating income during 2011 on segment of the business

discontinued near year-end (net of income taxes) . . . . . . . . . . . . . . . . . . . 205,000

Loss on disposal of discontinued segment (net of income

tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000

Extraordinary loss (net of income tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . 930,000

Prior period adjustment (increase in 2010 amortization

expense, net of income tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000

Cash dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000

Instructions

a. Prepare a condensed income statement for 2011, including earnings per share statistics. Beach, Inc., had 200,000 shares of $1 par value common stock and 100,000 shares of $6, $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, and amounted to $10,700,000.

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 $75. Assume also that there are no changes in outstanding common or preferred stock in 2012. Do you consider the

$75 earnings per share figure in 2012 to be a favorable or unfavorable statistic in comparison with 2011 performance? Explain.