![]() ![]() ![]() (1) Explain why Christina Corporation is considered to have a simple capital structure. Furthermore, the earnings per share data presented on a corporation’s financial statements is dependent upon the capital structure. The capital structure of a corporation is the result of its past financing decisions. The statement will be part of Christina Corporation’s annual report to stockholders and should include appropriate earnings per share presentation. Starting with income from operations before income taxes, prepare a comparative income statement for the years ended and 2017. Determine the weighted-average number of common shares that would be used in computing earnings per share on the current comparative income statement for: These were the only common stock transactions during the past 2 fiscal years. Christina distributed a 20% stock dividend on the common shares outstanding on December 1, 2017. On September 1, 2016, Christina sold an additional 400,000 shares of the common stock at$17 per share. There were 1,000,000 shares of $1 par common stock outstanding on June 1, 2016. All of this stock is outstanding, and no preferred dividends are in arrears. ![]() The company has not issued any convertible securities or warrants and there are no outstanding stock options.Ĭhristina issued 40,000 shares of$100 par value, 6% cumulative preferred stock in 2014. ![]() A 40% combined income tax rate pertains to any and all of Christina Corporation’s profits, gains, and losses.Ĭhristina’s capital structure consists of preferred stock and common stock. Christina experienced a loss from discontinued operations of $400,000 on March 3, 2018. Income from operations before income taxes for Christina was $1,400,000 and$660,000, respectively, for fiscal years ended and 2017. Christina employs a fiscal year ending May 31. Christina Corporation is preparing the comparative financial statements to be included in the annual report to stockholders. ![]()
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