Construction Ltd. had the following activity related to its shares for the year ended December 31,...

Construction Ltd. had the following activity related to its shares for the year ended December 31, 2020. Common shares outstanding, January 1: 150,000 $3, cumulative preferred shares outstanding, January 1: 3,000 During 2020 April 1: Declared a 2-for-1 stock split on common shares July 1: Issued 20,000 common shares. August 1: Issued 1,000 $2, non-cumulative preferred shares. October 1: Repurchased 50,000 common shares. December 1: Declared a 15% stock dividend on common shares. Net income for the year was $476,000. No dividends were declared or paid in 2020. Required : Calculate basic earnings per share for 2020. Round to the nearest cent.

Expert Solution

Basic Earning Per Share

$ 1.39

(476000-(3000*3))/335375

Working:

	Shares	Holding Months	Stock Dividend/Stock Split [Restatement]	Weighted Average Shares [Bal.Holding Months/12Restatement]
Opening Share	150,000	3	2*1.15	86,250
Stock Split [150000*1]	150,000
Bal.	300,000	3	1.15	86,250
Further Isssue	20,000
Bal.	320,000	3	1.15	92,000
Treasury Stock	(50,000)
Bal.	270,000	2	1.00	45,000
Stock Dividend [270000*.15]	40,500
Bal.	310,500	1	1.00	25,875
Total		12		335,375

Number of shares to be used in computing basic earnings per share	335,375

Preferred Dividend =3000*3=9000

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