Question

Cameron Company had 10,000 shares of common stock authorized and 9,500 shares issued and outstanding at the beginning of the year. There were no stock transactions during the year. During the year, the company reported net income of $30,000. Cameron Company has no preferred stock authorized. The company's basic earnings per share (rounded to two decimal points) is

Answer 1

The basic earnings per share of the company is $3.16.

Step-by-step explanation:

The formula to compute the basic earnings per share is as:

Basic earnings per share = (Net Income - Preferred dividends) / Weighted average common shares outstanding

where

Net Income is $30,000

Preferred dividends is $0

Weighted average common shares outstanding is 9,500

Putting the values in the above formula:

= ($30,000 - $0) / 9,500

= $30,000 / 9,500

= $3.16 per share