Statement of retained earnings Hayes Enterprises began 2015 with a retained earnings balance of $928,000. During 2015, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2015, the firm's retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2015. a. Prepare a statement of retained earnings for the year ended December 31, 2015, for Hayes Enterprises. (Note: Be sure to calculate and include the amount of cash dividends paid in 2015.) b. Calculate the firm's 2015 earnings per share (EPS). c. How large a per-share cash dividend did the firm pay on common stock during 2015?

Answer and Explanation:

The preparation and computation are shown below:

                            Hayes Enterprises  

Statement of Retained Earnings December 31, 2015  

Particulars              Amount $             Amount $

beginning Balance 928,000  

Add:

Earning during

the year                       377,000  

                                 1,305,000  

Less: Dividend

paid to

Preferred Stockholders47,000   1,258,000

Less: Dividend

paid on

common Stock                          210,000

Closing balance                          1,048,000

b) Earning per share is

= Earning ÷ No. of Common Stock

= ($377000 - $47000) ÷ 140000

= $2.36 per share

And,  

c) Cash dividend per share is

= $210,000 ÷ 140,000

= $1.50

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