The capital structure of Redding Design Ltd. at December 31, 2019, included 15,000 $1 preferred shares and 420,000 common shares. Common shares outstanding during 2020 were 330,000 in January through March; 348,000 during April; 385,000 May through September; and 420,000 during October through December. Income from continuing operations during 2020 was $446,000. The company discontinued a segment of the business at a gain of $61,500. The board of directors of Redding Design Ltd. has restricted $82,500 of retained earnings for expansion of the company’s office facilities.

Required

1. Compute and report Redding Design Ltd.’s earnings per share at the end of 2020. Income and loss amounts are net of income tax.

2. Show two ways of reporting Redding Design Ltd.’s retained earnings restriction. Retained Earnings at December 31, 2019, was $172,000, and total contributed capital at December 31, 2020, is $575,000. Redding Design Ltd. declared cash dividends of $250,000 during 2020.