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Etice Assignment Gradebook ORION Downloadable eTextbook ament CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Problem 16-06 Nash Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,746,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,459,000. In both years, the company incurred a 10% interest expense on $2,370,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $591,000 on February 2021. The company uses a 20% effective tax rate for income taxes. The capital structure of Nash Corporation on June 1, 2019, consisted of 976,000 shares of common stock outstanding and 19,700 shares of $50 par value, 6%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants. On October 1, 2019, Nash sold an additional 510,000 shares of the common stock at $20 per share. Nash distributed a 20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020, Nash was able to sell an additional 801,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years. Your answer is correct. Identify whether the capital structure at Nash Corporation is a simple or complex capital structure. T Simple Capital Structure SHOW SOLUTION LINK TO TEXT x Your answer is incorrect. Try again. Determine the weighted average number of shares that Nash Corporation would use in calculating earnings per share for the fiscal year ended: olie 6 00 loboril n e teliabte ne-amad Aision of labs low care se Norciona 101

Answer 1

Weighted Average No. of Shares
May 31, 2020
As on June 1 , 2019	976000
Oct. 1, 2019 Issue	340000	=510000*8/12
Weighted Average No. of Shares	1316000
May 31, 2021
As on June 1 , 2020	1486000	=976000+510000
Dec. 1, 2020 Issue	400500	=801000*6/12
Weighted Average No. of Shares	1886500

NASH CORPORATION
Comparative Income Statement
For Fiscal Years ended May 31, 2020 and 2021
	2020		2021
Income from operations	$17,46,000		$24,59,000
Interest Expense	-$2,37,000	=-2370000*10%	-$2,37,000	=-2370000*10%
Income before Taxes	$15,11,020		$22,24,021
Income Taxes	-$3,02,204	=-1511020*20%	-$4,44,804	=-2224021*20%
Income from continuing operations	$12,08,816		$17,79,217
Loss from discontinued operations	$0		-$5,91,000
Net Income / (Loss)	$12,08,816		$11,88,217
Earning per Share:
Income from continuing operations	$0.9186	=1208816/1316000	$0.9431	=1779217/1886500
Loss from discontinued operations	$0.0000		-$0.3133	=-591000/1886500
Net Income / (Loss)	$0.9186		$0.6299