Indigo Inc. presented the following data.Net income$2,610,000Preferred stock: 48,000shares outstanding, $100 par,...

Indigo Inc. presented the following data.

Net income		$2,610,000
Preferred stock: 48,000 shares outstanding, $100 par, 8% cumulative, not convertible		4,800,000
Common stock: Shares outstanding 1/1		769,200
Issued for cash, 5/1		291,600
Acquired treasury stock for cash, 8/1		156,000
2-for-1 stock split, 10/1

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

Earnings per share

$

Expert Solution

Weighted average outstanding shares = (769200+ 291600*8/12-156000*5/12)*2

= 1797200 shares

Earnings per share = (Net income - Preferred dividend)/weighted average outstanding shares

= (2610000-4800000*8%)/1797200

= $1.24 per share

ekkarill92 answered 2 years ago

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