Question

Quantum Technology had $652,000 of retained earnings on December 31, 20X2. The company paid common dividends of $33,300 in 20X2 and had retained earnings of $513,000 on December 31, 20X1.
a. How much did Quantum Technology earn during 20X2?




b. What would earnings per share be if 42,400 shares of common stock were outstanding? (Round your answer to 2 decimal places.)

Answer 1

Answer:

(a) $546,300

(b) $12.88

Explanation:

(a)  Earnings available to common stockholders:

= Dividend + Retained Earnings

= 33,300 + 513,000

= $546,300

Earnings available to common stockholders means the amount available to distribute as dividend.

But the company need not pay full earnings as dividend. They may left some portion as retained earnings.

(b)  Earnings per share:

= Earnings available to common stockholders ÷ no. of shares of common stock

= $546,300 ÷ 42,400

= $12.88