The capital structure of Renault Marketing Inc at December

31 #8369
The capital structure of Renault Marketing Inc at December 31

The capital structure of Renault Marketing Inc. at December 31, 2016, included 50,000, $0.50
preferred shares and 74,000 common shares. The 50,000 preferred shares were issued in
2009. Common shares outstanding during 2017 were 74,000 January through April and 80,000
May through September. A 20 percent stock dividend was paid on October 1. Income from
continuing operations during 2017 was $122,000. The company discontinued a segment of the
business at a gain (net of tax) of $9,250. The Renault Marketing Inc. board of directors restricts
$125,000 of retained earnings for contingencies.

Required

1. Compute Renault Marketing Inc.'s earnings per share. Start with income from continuing
operations. Income of $122,000 is net of income tax.

2. Show two ways of reporting Renault Marketing Inc.'s retained earnings restriction. Retained
Earnings at December 31, 2016, was $145,500, and total contributed capital at December 31,
2017, is $375,000. The company declared dividends of $49,500 in 2017.

The capital structure of Renault Marketing Inc at December 31

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