The stockholders' equity section of Tkachuk Corporation appears below as
of December 31, 2007.
8% preferred stock, $50 par value, authorized
100,000 shares, outstanding 90,000 shares $ 4,500,000
Common stock, $1.00 par, authorized and issued 10 million shares 10,000,000
Additional paid-in capital 20,500,000
Retained earnings $134,000,000
Net income 33,000,000 167,000,000
Net income for 2007 reflects a total effective tax rate of 34%. Included in the net income figure is a
loss of $18,000,000 (before tax) as a result of a major casualty, which should be classified as an extraordinary
item. Preferred stock dividends of $360,000 were declared and paid in 2007. Dividends of $1,000,000
were declared and paid to common stockholders in 2007.
The solution explains how to calculate earnings per share