Question

Edmond Biometrics reported net income of $ 700 comma 000 for both last year and the current year. The shares outstanding for the prior year were 100 comma 000 shares for the whole year. On December 1 of the current​ year, Edmond declared a two for one stock split. There were no other stock transactions in either year. Compute the EPS that would be shown on a comparative income statement for Years 1 and 2.​ (Round your answer to the nearest​ cent.)

Answer 1

Answer:

Year1 1 EPS = $7

Year 2 EPS = $4

Explanation:

Number of shares outstanding in year 1 = 100,000

Number of shares outstanding in year 2 = 100,000 * 2 = 200,000

Earning per share (EPS) in year 1 = $700,000 / 100,000 = $7

EPS in year 2 = $700,000 / 200,000 = $3.50, or $4 to the nearest cent.