Flyaway Travel Company reported net income for 2013 in the amount of $90,000. During 2013, Flyaway declared and paid $2,125 in cash dividends on its nonconvertible preferred stock. Flyaway also paid $10,000 cash dividends on its common stock. Flyaway had 40,000 common shares outstanding from January 1 until 10,000 new shares were sold for cash on April 1, 2013. What is 2013 basic earnings per share?
A)$1.85.
B)$1.64.
C)$1.76.
D)None of these is correct.

Question

Quizplus · Accepted Answer

Basic earnings per share = Net income - Preferred dividends / Weighted average number of common shares outstanding= (90,000 - 2,125) / (40,000 x 9/12 + 50,000 x 3/12)= 87,875 / 47,500= $1.85

Flyaway Travel Company Reported Net Income for 2013 in the Amount