On December 31, 2020, the Bennett Company had 110,000 shares of common stock issued and outstanding. On July 1, 2021, the compan

Question

2 years ago

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On December 31, 2020, the Bennett Company had 110,000 shares of common stock issued and outstanding. On July 1, 2021, the compan

y sold 22,000 additional shares for cash. Bennett's net income for the year ended December 31, 2021, was $630,000. During 2021, Bennett declared and paid $72,000 in cash dividends on its nonconvertible preferred stock. What is the 2021 basic earnings per share

Business

1 answer:

Alenkinab [10] · Answer 1 · 2022-11-14T20:42:38+03:00

Answer:

$4.61

Explanation:

Calculation to determine the 2021 basic earnings per share

Using this formula

2021 basic earnings per share=Net income-Cash Dividend/shares of common stock issued+(additional shares for cash*6/12)

Let plug in the formula

2021 basic earnings per share=$630,000-$72,000/110,000+(22,000*6/12)

2021 basic earnings per share=$558,000/110,000+11,000

2021 basic earnings per share=$558,000/121,000

2021 basic earnings per share=$4.61

Therefore the 2021 basic earnings per share is $4.61