The Following Information Is Available from the Balance Sheets at the End

question 139

Essay

The following information is available from the balance sheets at the end of 2018 and 2017 for Kitchen Equipment Company.
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$$\begin{array} { l r r } & \underline{\mathbf { 2 0 1 8 }} & \underline{\mathbf { 2 0 1 7 }} \\ \text { Accounts payable }& \$ 120,000 & \$ 100,000 \\\text { Accrued liabilities } & 35,000 & 30,000 \\\text { Taxes payable } & 40,000 & 10,000 \\\text { Short-term notes payable } & 0 & 80,000 \\\text { Bonds payable due within next year }& 300,000 & 100,000 \\\text { Total current liabilities } & \underline{ \$ 495,000} & \underline{\$ 320,000} \\\text { Bonds payable } & \underline{\$ 600,000} & \underline{\$ 500,000 }\\\text { Common stock, } \$ 5 \text { par }& \$ 800,000 & \$ 800,000 \\\text { Retained earnings } & \underline{ \$ 200,000 }& \underline{\$ 100,000} \\ \text { Total stockholders' equity } & \$ 1,000,000 & \$ 900,000 \\\text { Total liabilities and stockhol ders' equity }& \underline{\$2,095,000}& \underline{\$1,720,000}\end{array}$$ Net income for 2018 and 2017 was $120,000 and $460,000,respectively.No stock was issued during either year.Answer the following:
A) How many shares of stock are outstanding at the end of 2018 ?
B) If a company has preferred stock, why are preferred dividends subtracted when computing earnings per share?
C) What is the amount of earnings per share for the year ended December 31,2018 ?
D) Explain what information is provided with earnings per share.

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Definitions:

Peroxisomes

Small, membrane-bound organelles present in the cytoplasm of almost all eukaryotic cells, involved in the catabolism of very long chain fatty acids, branched chain fatty acids, D-amino acids, and the reduction of reactive oxygen species - specifically hydrogen peroxide.

Hydrogen Peroxide

A chemical compound used as an oxidizer, bleaching agent, and antiseptic.

Fatty Acids

Long chains of hydrocarbon molecules that are a major component of lipids in the diet and play a crucial role in biological functions and energy storage.

Secretory Vesicle

Membrane-bound vesicles produced by cells to store and transport substances (like hormones or neurotransmitters) that are to be secreted.