(Solution) - A portion of the combined statement of income and retained -(2025 Original AI-Free Solution)

Paper Details

A portion of the combined statement of income and retained earnings of Nestor Inc. for the current year ended December 31, 2014 follows:

Note 1. During the year, Nestor Inc. suffered a loss from discontinued operations of $2,205,000 after the applicable income tax reduction of $735,000.
At the end of 2014, Nestor Inc. has outstanding 12.5 million common shares and 90,000 shares of 6% preferred. On April 1, 2014, Nestor Inc. issued 1 million common shares for $32 per share to help finance the loss.
Instructions
(a) Calculate the earnings per share on common shares for 2014 as it should be reported to shareholders.
(b) Assume that Nestor Inc. issued a 20% stock dividend on September 1, 2014. Calculate the earnings per share on common shares for 2014 as it should be reported to shareholders.