On January 1, 2023, Logan Limited had shares outstanding as follows: 6% cumulative preferred shares, $100 par
Question:
On January 1, 2023, Logan 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:
On May 14, 2023, Logan realized a $97,000 gain (before tax) on a discontinued operation from a business segment that had originally been purchased in 2003.
On December 31, 2023, the company recorded income of $680,000 before tax, not including the discontinued operation gain. Logan has a 30% tax rate.
Instructions
a. Calculate the weighted average number of common shares at December 31, 2023.
b. Calculate net income for the year ended December 31, 2023.
c. Calculate earnings per share for 2023 as it should be reported to shareholders. Round to the nearest cent.
d. Assume that Logan declared a 1-for-2 reverse stock split on February 10, 2024, and that the company’s financial statements for the year ended December 31, 2023, were issued on February 28, 2024. Calculate earnings per share for 2023 as it should be reported to shareholders. Round to the nearest cent.
e. What determines that Logan has a simple capital structure?
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781119740445
13th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy