Question

New corporation had net income for 2016 of​ $80,000. new corporation had​ 13,000 shares of common stock outstanding at the beginning of the year and​ 24,000 shares of common stock outstanding at the end of the year. there were​ 12,000 shares of preferred stock outstanding all year. during​ 2016, new corporation declared and paid preferred dividends of​ $21,000. what is new​ corporation's earnings per​ share? (round the answer to two decimal​ places.)

Answer 1

Average number of common shares outstanding: (13,000 + 24,000 ) / 2 = 18,500 Earnings Per Share = (Net income - Preferred dividends) / Average number of common shares outstanding Earnings Per Share = ($80,000 - $21,000 ) / 18,500 Earnings Per Share = $3.19