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The following information is related to Tobey Corporation for 2020:  Net Income: $2,500,000  Common...

The following information is related to Tobey Corporation for 2020:
 Net Income: $2,500,000
 Common Stock Activities
1/1/20: 700,000 common shares outstanding
3/1/20: Purchased 60,000 treasury shares
7/1/20: 3-for-1 stock split
11/1/20: 120,000 new shares issued for cash
 8% Cumulative Preferred Stock
10,000 shares at $100 par
Required
a. Compute weighted average common shares outstanding (WACSO) for 2020.
b. Compute basic earnings per share for 2020. (Round to no fewer than four decimal places.)

Solutions

Expert Solution

1) Weighted average common shares outstanding (WASCO) for 2020.

Calculations -

2. Compute basic earnings per share for 2020

Basic Earning per Share = (Net Income - Preferred Dividend ) / Weighted average common shares outstanding

Basic Earning per Share = (2500000 - 80000) / 1310000

                                           = 2420000/1310000

                                           = 1.85

Calcualtions for Preference Dividend = (10000*100)*8% =80000

                                             

ekkarill92 answered 1 year ago
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