Question

In 2020, Pharoah Company reported a discontinued operations loss of $1120000, net of tax. It declared and paid preferred stock dividends of $110000 and common stock dividends of $370000. During 2020, Pharoah had a weighted average of 500000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by

Answer 1

As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by $2.24.

Explanation:

Change in EPS

= $1120000 ÷ 500000 outstanding shares

= $2.24.