Question

EPS PickApart Arts, Inc., had earnings of $330,000 for the year. The company had 48,000 shares of common stock outstanding during the year and issued 2,200 shares of $100 par value preferred stock. The preferred stock has a dividend of $6 per share. There were no transactions in either common or preferred stock during the year. Determine the basic earnings per share for PickApart Arts for the year. Round answer to two decimal places. $fill in the blank 1 per share

Answer 1

The basic earnings per share (EPS) for Pick Apart Arts for the year is $6.60 per share. This is calculated by subtracting total preferred dividends from net earnings and dividing the remainder by the number of common shares outstanding.

Step-by-step explanation:

To determine the basic earnings per share (EPS) for Pick Apart Arts for the year, first, we need to subtract the preferred dividends from the net earnings. Since there are 2,200 shares of preferred stock with a $6 dividend, the total preferred dividends amount to $13,200 (2,200 shares * $6). After subtracting this from the net earnings of $330,000, we get $316,800 available for common shareholders.

Now, dividing this adjusted net income by the number of common shares outstanding (48,000 shares), we get the EPS. The basic EPS calculation is:

$316,800 / 48,000 shares = $6.60 per share

Thus, the basic earnings per share for Pick Apart Arts for the year is $6.60 per share, rounded to two decimal places.