In: Accounting
At January 1, 2020, Headland Company’s outstanding shares
included the following.
295,000 shares of $50 par value, 7% cumulative preferred stock |
854,000 shares of $1 par value common stock |
Net income for 2020 was $2,499,000. 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, 436,000 shares of common stock were sold for $10
per share, and on October 1, 2020, 106,000 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 |
$ |
Basic EPS = Earning Available for Equity Holder
Weighted Average No. of Shares
= $ 1,466,500 / 1,145,500 Shares
= $ 1.28 per shares
Earning Available =
Net Income $2,499,000
Less-Pref. Dividend
(7% X $ 50X 295000 Shares) $1,032,500
Earning Available = $ 1,466,500