Question

Ringmeup Inc. had net income of $112,800 for the year ended December 31, 2019. At the beginning of the year, 36,000 shares of common stock were outstanding. On May 1, an additional 14,000 shares were issued. On December 1, the company purchased 4,800 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend on the 6,000 shares of 3.30%, $100 par value preferred stock that were outstanding the entire year.

Required:
Calculate basic earnings per share of common stock for the year ended December 31, 2019. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

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Ring me up Inc.
Net Income available for common share holders
Calculation of preferred dividend	Amount $	Note
Number of shares	6,000.00	A
Face value per share	100.00	B
Total Face value	600,000.00	C=A*B
Dividend rate	3.30%	D
Preferred dividend	19,800.00	E=C*D
Net Income	112,800.00	F
Net Income available for common share holders	93,000.00	G=F-E
Weighted number of Shares on December 31, 2019	H	I	J=H*I	K=J/12
	Units	Number of months held	Total held	Weighted average
Common Shares outstanding at the beginning	36,000.00	12.00	432,000.00	36,000.00
Shares issued on May 1	14,000.00	8.00	112,000.00	9,333.33
Shares purchased on Dec 1	(4,800.00)	1.00	(4,800.00)	(400.00)
Weighted number of Shares on December 31, 2019	45,200.00			44,933.33
Diluted earnings per share	Amount $	Note
Net Income available for common share holders	93,000.00	See G
Weighted average shares	44,933.33	See K
Diluted earnings per share	2.07	L=G/K