On January 1, 2010, Bailey Industries had stock outstanding follows.
6% Cumulative preferred stock, $100 par value,
issued and outstanding 10,000 shares $1,000,000
Common stock, $10 par value, issued and
outstanding 200,000 shares 2,000,000
To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional
170,000 common shares. The acquisitions took place as shown below.
Date of Acquisition Shares Issued
Company A April 1, 2010 60,000
Company B July 1, 2010 80,000
Company C October 1, 2010 30,000
On May 14, 2010, Bailey realized a $90,000 (before taxes) insurance gain on the expropriation of
investments originally purchased in 2000.
On December 31, 2010, Bailey recorded net income of $300,000 before tax and exclusive of the gain.
Instructions
Assuming a 40% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2010. Assume that the expropriation is extraordinary.
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