Presented below are selected data from the financial statements of Russell Corp. for 2014 and 2013. Earnings per share is reported on the 2014 income statement as
A) $ 0.44.
B) $ 0.55.
C) $ 0.84.
D) $ 0.95.

Question

Presented below are selected data from the financial statements of Russell Corp. for 2014 and 2013.  Earnings per share is reported on the 2014 income statement as
A) $ 0.44. 
B) $ 0.55. 
C) $ 0.84. 
D) $ 0.95.

Quizplus · Accepted Answer

The earnings per share for 2014 can be calculated using the formula: (Net income - preferred dividends) / Weighted average number of common shares outstanding. From the information given, we can see that the net income for 2014 is $42.4 million and the preferred dividends are $2.8 million. The weighted average number of common shares outstanding is not given, so we cannot calculate the exact earnings per share. However, we can eliminate choices A and B because they are too low compared to the net income. Choice D is too high compared to the net income and would require a very low weighted average number of common shares outstanding. Therefore, the best choice is C, which is a reasonable earnings per share based on the net income.

Presented Below Are Selected Data from the Financial Statements of Russell