Question

In: Accounting

Determine the basic earnings per share for Junkyard arts for the year

Junkyard arts inc has earnings of $316,000 for the year.The company had 40,000 shares of common stock outstanding during the year and issued 15,000 shares of $50 par value preferred stock. The Preferred stock has a dividend of $1.60 per share.There were no transactions in either common or  preferred stock during the year 

Determine the basic earnings per share for Junkyard arts for the year

 

Solutions

Expert Solution

Earnings per share : The amount of income made per share of outstanding common stock during a certain time period is expressed as earnings per share. This ratio is used to evaluate the shareholder profitability of a corporation.

Following formula can be used to calculate earnings per share

Earnings per share = Net income (loss) - Preferred Dividends / Average number of common shares outstanding

Calculation of basic earnings per share for junkyard arts for the year

Basic earnings per share  = Net income - Preferred dividends / Average no.of. common shares outstanding

=$316,000 - ( No.of. Preferred shares x $1.60 per share) / 40,000 shares

=$316,000 - (15,000 x $1.60 per share) / 40,000 shares

=$7.3 per share

 

 

Therefore, the basic earnings per share for Junkyarts corporation for the year $7.3 per share

balaji rao answered 2 years ago
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