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Long Life Light Bulb Co: Compute earnings for common stockholders, retained earnings.

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At the end of 2005, the Long Life Light Bulb Company announced it had produced a gross profit of $1 million. The company has also established that over the course of this year it has incurred $345,000 in operating expenses and $125,000 in interest expenses. The company is subject to a 30 percent tax rate and has declared $57,000 total preferred stock dividends.

(a) How much is the earnings available for common stockholders?
(b) Compute the increased retained earnings for 2005 if the company were to declare a $4.25 common stock dividend. The company has 15,000 shares of common stock outstanding.

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This solution is comprised of a detailed explanation to answer how much is the earnings available for common stockholders and compute the increased retained earnings for 2005 if the company were to declare a $4.25 common stock dividend.

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Earnings for common stockholders.
At the end of 2005, the Long Life Light Bulb Company announced it had produced a gross profit of $1 million. The company has also established that over the course of this year it has incurred $345,000 in operating ...

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