Question

Allen Lumber Company had earnings after taxes of $510,000 in the year 2020 with 450,000 shares outstanding on December 31, 2020. On January 1, 2021, the firm issued 30,000 new shares. The company took the proceeds from these new shares as well as other operating improvements and earned $617,100 earnings after taxes in 2021. Earnings per share for the year 2021 were

Answer 1

The earnings per share for the year 2021 were $1.29.

Step-by-step explanation:

To calculate the earnings per share (EPS) for the year 2021, we need to divide the total earnings after taxes by the number of shares outstanding at the end of the year.

Total earnings after taxes in 2021 were $617,100. The number of shares outstanding on December 31, 2020, was 450,000. On January 1, 2021, the company issued an additional 30,000 shares. Therefore, the total number of shares at the end of the year is 480,000 (450,000 + 30,000).

To calculate the EPS, we divide the total earnings by the total number of shares: EPS = $617,100 / 480,000 = $1.285625 per share. Therefore, the earnings per share for the year 2021 were $1.29 (rounded to two decimal places).