The capital structure
of Hillstride, Inc., at December 31, 2011, included 26,000 shares of $2 preferred stock and 42,000 shares of common stock
. Common stock outstanding during 2012 totaled 42,000 shares. Income from continuing operations during 2012 was $118,000. The company discontinued a segment of the business at a gain of $28,000 and also had an extraordinary gain of $18,000. The Hillstride board of directors restricts $97,000 of retained earnings for contingencies. Retained earnings at December 31, 2011, was $97,000, and the company declared preferred dividends of $52,000 during 2012.
1. Compute Hillstride’s earnings per share for 2012. Start with income from continuing operations. Income and loss amounts are net of income tax.
2. Show two ways of reporting Hillstride’s retained earnings restriction.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...