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Sunland Inc. presented the following data. Net income $2,680,000 Preferred stock: 48,000 shares outstanding, $100 par,...

Sunland Inc. presented the following data.

Net income $2,680,000
Preferred stock: 48,000 shares outstanding, $100 par, 8% cumulative, not convertible 4,800,000
Common stock: Shares outstanding 1/1 729,600
   Issued for cash, 5/1 273,600
   Acquired treasury stock for cash, 8/1 160,800
   2-for-1 stock split, 10/1


Compute earnings per share. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share

$enter earnings per share rounded to 2 decimal places

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Expert Solution

Answer

Net Income

$      2,680,000
Less: Preferred Dividend $         384,000 (48000 x $ 100 x 8%)
Earning for Common Stockholders $      2,296,000
No. of Common Stock outstanding          1,684,800 (Workings)
Earnings per share 1.36
Computation of Common Stock outstanding
Beginning outstanding             729,600
Add: Issued             273,600
Less: Acquired treasury stock             160,800
Outstanding before stock split             842,400
Outstanding after stock split          1,684,800 (842400 x 2)

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