A company had net income of $250,000.On January 1,there were 12,000 shares of common stock outstanding.On May 1,the company issued an additional 9,000 shares of common stock.The company declared a $7,900 dividend on its noncumulative,nonparticipating preferred stock.There were no other stock transactions.The company had earnings per share of:
A)$13.45
B)$13.89
C)$11.53
D)$26.90
E)Amount cannot be determined as problem does not state if there are any dividends in arrears.

Question

Quizplus · Accepted Answer

Net income available to common stockholders = $250,000 - $7,900 = $242,100Weighted-average number of shares outstanding = (12,000 x 4/12) + (21,000 x 8/12) = 17,500 sharesEarnings per share = $242,100 / 17,500 shares = $13.89

A Company Had Net Income of $250,000