The following data relate to the operations of Slick Software, Inc., during 2018. Continuing operations: Net sales $ 19,850,000 Costs and expenses (including applicable income tax) 16,900,000 Other data: Operating income during 2018 on segment of the business discontinued near year-end (net of income tax) 140,000 Loss on disposal of discontinued segment (net of income tax benefit) 550,000 Prior period adjustment (increase in 2017 depreciation expense, net of income tax benefit) 350,000 Cash dividends declared 950,000
Instructions:
a. Prepare a condensed income statement for 2018, including earnings per share figures. Slick Software, Inc., had 200,000 shares of $1 par value common stock and 80,000 shares of $6.25, $100 par value preferred stock outstanding throughout the year.
b. Prepare a statement of retained earnings for the year ended December 31, 2018. As originally reported, retained earnings at December 31, 2017, amounted to $7,285,000.
c. Compute the amount of cash dividend per share of common stock declared by the board of directors for 2018. Assume no dividends in arrears on the preferred stock.
d. Assume that 2018 earnings per share is a single figure and amounts to $8.00. Assume also that there are no changes in outstanding common or preferred stock in 2019. Do you consider the $8.00 earnings per share figure in 2019 to be a favorable or unfavorable figure in comparison with 2018 performance? Explain.
