Answer:
The earning per share for the year ended December 31,2018 are $2.37
Explanation:
earnings per share:
usually:
net income / shares outstanding
<u>but, when there are preferred stock:</u>
(net income - preferred stock dividends) / average shares outstanding
(2,200,000 - 10,000) / 922,500 shares (A) = 2,37398374 = 2.37
The cash dividends to common stock do not impact the earnings per share, only the preferred stock does.
(A)
The stock dividends increases the share outstanding:
820,000 x 25% = 205,000 new shares
total shares 1,025,000 shares
<u>The average stock will be:</u>
820,000 at the beginning of the period
1,025,000 at the end of the period
average: (beginning + ending ) / 2
(820,000 + 1,025,000) / 2 = 1,845,000 / 2 = 922,500 shares
