Question
In: Accounting
Net income $2,350,000, Preferred stock: 52,000 shares outstanding, $100 par, 9% cumulative, not convertible 5,200,000 Common...
Net income $2,350,000, Preferred stock: 52,000 shares outstanding, $100 par, 9% cumulative, not convertible 5,200,000
Common stock: Shares outstanding 1/1 686,400
Issued for cash, 5/1 270,000
Acquired treasury stock for cash, 8/1 148,800
2-for-1 stock split, 10/1
Compute earnings per share:
Solutions
Expert Solution
Answer:
Earnings per share = Net Income after Preference/ Weighted outstanding number of shares
Net Income
$
23,50,000
Less : Preferred Dividends
$
4,68,000
Net Income after Preference Dividend
$
18,82,000
Begininng
6,86,400
Issued on 5/1
(2,70,000*8/12)
1,80,000
Less: Acquired treasury stock 8/1
(1,48,800*5/12)
- 62,000
Total number of stocks
8,04,400
Add: Stock Split
8,04,400
Weighted outstanding number of shares
16,08,800
Earnings per share = $ 18,82,000 / 16,08,800 = $ 1.17
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