At January 1, 2020, Splish Company’s outstanding shares included the following. 259,000 shares of $50 par...

At January 1, 2020, Splish Company’s outstanding shares included the following.

259,000 shares of $50 par value, 7% cumulative preferred stock

974,000 shares of $1 par value common stock

Net income for 2020 was $2,570,000. No cash dividends were declared or paid during 2020. On February 15, 2021, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2020.

On April 1, 2020, 454,000 shares of common stock were sold for $10 per share, and on October 1, 2020, 112,000 shares of common stock were purchased for $21 per share and held as treasury stock.

Compute earnings per share for 2020. Assume that financial statements for 2020 were issued in March 2021. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share $

Expert Solution

Earning per share(EPS) is calculated by deducting the preference dividend from the net income divided by the total outstanding common shares of the company. The growing earning per share is good for the company because it indicates that the earning of the company is growing and creates goodwill of the company in the market.

ekkarill92 answered 1 year ago

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