Agassi Corp is preparing the comparative financial statements to be included in the annual report to stockholders. Agassi employs a fiscal year ending 5/31.Income from operations before income taxes for Agassi was $1,400,000 and $660,000, respectively, for fiscal years ended 5/31/11 and 2010. Agassi experienced an extraordinary loss of $400,000 because of an earthquake on 3/3/11. A 40% combined income tax rate pertains to any and all of Agassi Corp's profits, gains, and losses.Agassi's capital structure consists of preferred stock and common stock. The company has not issued any convertible securities or warrants and there are no outstanding stock options.Agassi issued 40,000 shares of $100 par value, 6% cumulative preferred stock in 2007. All of this stock is outstanding, and no preferred dividends are in arrears.There were 1,000,000 shares of $1 par common stock outstanding on 6/1/09. On 9/1/2009, Agassi sold an additional 400,000 shares of the common stock at $17 her share.Agassi distributed a 20% stock dividend on the common shares outstanding on 12/1/10. These wer the only common stock tranactions during the past 2 fiscal years.

a) Determine the weighted-average number of common shares that would be used in computing earnings per share on the current comparateive income statement for:
1) The year ended 5/31/10
2) The year ended 5/31/11

b) Starting with income from operations before income taxes, prepare a comparative income statement for the years ended 5/31/11 and 5/31/10. The statement will be part
of Agassi Corp's annual report to stockholders and should include appropriate earnings per share presentation.

c) The capital structure of a corp is the result of its past financing decisions. Furthermore, the earnings per share data presented on a corp's financial statement is
dependent upon the capital structure.
1) Explain why Agassi Corp is considered to have a simple capital structure.
2) Describe how earnings per share data would be presented for a corp that has a complex capital structure.