Response to the following problem:
The capital structure of Avian Company at December 31, 20X7, included 5,000 shares of $2 preferred stock and 120,000 shares of common stock. Common shares outstanding during 20X8 were 120,000. Income from continuing operations during 20X8 was $370,000. The company discontinued a segment of the business at a gain of $60,000 and also had an extraordinary loss of $48,000. Avian's board of directors has restricted $300,000 of retained earnings for expansion of the company's office facilities.
Required:
1. Compute Avian's earnings per share for 20X8. Start with income from continuing operations. Income and loss amounts are net of income tax.
2. Show two ways of reporting Avian's retained earnings restriction. Retained earnings at December 31, 20X7, was $120,000, and Avian declared cash dividends of $100,000 during 20X3.