# Earnings per share, discontinued operations The net income reported on the income statement of Cutler Co. was $4,000,000. There were 500,000 shares of$10 par common stock and 100,000 shares of $2 preferred stock outstanding throughout the current year. The income statement included a gain on discontinued operations of$400,000 after applicable income tax. Determine the per-share figures for common stock for (a) income before discontinued operations and (b) net income.

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 17, Problem 17.23EX
Textbook Problem

## Earnings per share, discontinued operationsThe net income reported on the income statement of Cutler Co. was $4,000,000. There were 500,000 shares of$10 par common stock and 100,000 shares of $2 preferred stock outstanding throughout the current year. The income statement included a gain on discontinued operations of$400,000 after applicable income tax. Determine the per-share figures for common stock for (a) income before discontinued operations and (b) net income.

Expert Solution

(a)

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

Given info: Items from financial statements

To determine:   The per share figures for common stock for

1. a) Income before discontinued operations

### Explanation of Solution

Earnings per share help to measure the profitability of a company. Earnings per share are the amount of profit that is allocated to each share of outstanding stock.

Formula:

Earningspershare on incomebefore discontinued operations} = Income before discontiued operations – PreferreddividendsWeighted average number of common shares outstanding

Working note for determination of earnings before discontinued operations and

Expert Solution

(b)

To determine
theNet income

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