Question

Scotland Corporation had net income for 2018 of $ 77 comma 000. Scotland had 13 comma 000 shares of common stock outstanding at the beginning of the year and 26 comma 000 shares of common stock outstanding at the end of the year. There were 11 comma 000 shares of preferred stock outstanding all year. During​ 2018, Scotland declared and paid preferred dividends of $ 22 comma 000. What is​ Scotland's earnings per​ share? (Round the answer to two decimal​ places.)

Answer 1

Answer:

$2.82 per share

Explanation:

The computation of the earning per share is shown below:

Earning per share = (Net income - preferred dividend) ÷ (Weighted average Number of common shares)

where,

Weighted average number of common shares is

= (13,000 shares + 26,000 shares) ÷ 2

= 19,500 shares

So, the earning per share is

= ($77,000 - $22,000) ÷ (19,500 shares)

= $2.82 per share