Task: Berry Company
1) Net income (including an extraordinary gain (net tax) of $70,000 $230,000
2) Capital Structure
a) cumulative 8% preferred stock, $100 par 6,000 shares issued/outstanding $600,000
b) $10 par common stock, 74,000 shares outstanding on January 1. $1,000,000
On April 1, 40,000 shares were issued for cash. On October 1, 16,000 shares were purchased and retired.
c) On January 2 of the current year, Berry purchased Raye Corp.
One of the terms of the purchase was that if Berry's net income for the following year is $240,000 or more 50,000 shares would be issued to Raye stockholders next year.
3) Other information
a) average market price per share of common stock during entire year $30
b) Income tax rate 30%