Question

On its Form 10-K for the year ended December 31, 2015, Bank of America Corp. reported information related to basic earnings per share. Fill in the missing information. Rounding instruction: Round answer a. to two decimal places. Round answer b., c., & d. to the nearest million. Round answer e. to three decimal places. $ millions, except per share amounts 2015 2014 2013 Net income $16,888 $4,833 d. Answer Preferred stock dividends $1,483 b. Answer $1,349 Net income applicable to common shareholders $15,405 c. Answer $10,583 Average common shares outstanding 10,462.282 10,527.818 e. Answer Basic earnings per share a. Answer $0.40 $0.94

Answer 1

Answer and Explanation:

The computations are as follows

a. For basic earning per share

=  Net income ÷ Average number of outstanding common shares

=  ($16,888 - $1,483) ÷ 10462.282 shares

= $1.47 per share

b. Preferred stock dividends = Net income - Net income applicable to common shareholders

= $4,833 - $4,211

= $622

c. The net income applicable to common shareholders is

= Average number of common shares outstanding × Basic earning per share

= 10,527.818  × $0.40

= $4,211

d. The net income is

= Preference stock dividend + Net income applicable to common shareholders

= $1,349 + $10,583

= $11,932

e. Average number of common shares outstanding is

= Net income for common shareholders ÷ basic earning per share

= $10,583 ÷ $0.94

= $11,258.51

We simply applied the general formulas