Question

​Josiah, Inc. provides the following information for​ 2017:Net income​$350,000Market price per share of common stock​$50 per shareDividends paid​$180,000Common stock outstanding at Jan.​ 1, 2017​160,000 sharesCommon stock outstanding at Dec.​ 31, 2017​250,000 sharesThe company has no preferred stock outstanding. Calculate the earnings per share for 2017.​ (Round your answer to two decimal​ places.)

Answer 1

Answer:

Earnings per share for 2017 = $1.707

Explanation:

Earnings per share relates to the specific period, that how much on each individual share the earnings has been during the period.

Therefore, if there is change in number of equity shares average is taken, for that.

Equity on 1 Jan 2017 = 160,000 shares

Equity on 31 December 2017 = 250,000 shares

Average = $\frac{160,000 + 250,000}{2} = 205,000$

Earnings per share for 2017 = $\frac{Net\ Income}{Average\ number\ of\ shares}$

= $\frac{350,000}{205,000} = 1.707$

Earnings per share = $1.71 (Rounded off)