Question

At december 31, 2014 rice company had 300,000 shares of common stock and 10,000 shares of 8%, $100 par value cumulative preferred stock outstanding. no dividends were declared on either the preferred or common stock in 2014 or 2015. on january 30, 2016, prior to the issuance of its financial statements for the year ended december 31, 2015, rice declared a 100% stock dividend on its common stock. net income for 2015 was $1,520,000. in its 2015 financial statements, rice's 2015 earnings per common share should be

Answer 1

The company has declared a 100% stock dividend on its common stock will not be considered while calculating the earnings per common shares should be.

Earnings per share = Net Income / Number of equity shares.

where Net Income = $1,520,000

Common equity shares = 300,000

Earnings per share = $1,520,000 / 300,000

Earnings per share = $5.07

Therefore, earnings per common share for year 2015 for Rice Corporation is $5.07