The following information is available for Barone Corporation: January 1, 2019 Shares outstanding 4,000,000 April 1. 2019 Shares
issued 640,000 July 1, 2019 Treasury shares purchased 240,000 October 1, 2019 Shares issued in a 2-for-1 stock split 4,400,000
a. Compute the weighted average number of shares to be used in computing earnings per share for 2019.
b. Assuming Barone Corporation had a net income of $9.850,000 in 2019 and that throughout 2019 there were 2,000 shares of $100 par value, 5% cumulative, nonconvertible preferred stock outstanding on which no dividends were declared, compute the EPS for 2019.
a. Compute the weighted average number of shares to be used in computing earnings per share for 2019.
b. Assuming Barone Corporation had a net income of $9.850,000 in 2019 and that throughout 2019 there were 2,000 shares of $100 par value, 5% cumulative, nonconvertible preferred stock outstanding on which no dividends were declared, compute the EPS for 2019.
1 answer:
Answer and Explanation:
a. The computation of the weighted average number of shares is shown in the attachment below:
b. Now the earning per share i.e EPS
= (Net Income - Preferred Dividend) ÷ (Weighted average number of shares )
= ($9,850,000 - $10,000) ÷ (8,720,000 shares)
= $1.13
The preference dividend is
= (2,000 × $100 × 5%)
= $10,000
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