Selected Items from the Financial Statements for Lorna Company Are

question 102

Multiple Choice

Selected items from the financial statements for Lorna Company are listed below:
$\begin{array} { l } \text { Paid in capital, December 31,2014}&\$100,000\\ \text {Retained earnings, December 31, 2014 }&\$75,000\\ \text {Commonstock dividends declared in 2014 }&\$75,000\\\text { Net income for the year ended December } 31,2014&\$100,000\\\end{array}$

Lorna Company has 5,000 common shares outstanding during the year.What are the earnings per share for the year ended December 31,2014?

• A) $12.00
• B) $15.00
• C) $20.00
• D) $25.00

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Definitions:

Future Cash Flows

Estimated incoming and outgoing cash transactions expected to occur in the future.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its residual value on the balance sheet.

Double Declining-Balance Depreciation

A method of accelerated depreciation that doubles the straight-line rate of depreciation.

Estimated Residual Value

The projected value of an asset at the end of its useful life, used in calculating depreciation.