Question

At December 31, 2017, Crane Company had 600,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 200,000 of which were issued on October 1, 2017. Net income for 2017 was $2,070,000, and dividends declared on preferred stock were $380,000.Compute Sarasota’s earnings per common share. (Round answer to 2 decimal places, e.g. 52.75.)

Answer 1

Sarasota’s earnings per common share is $2.82

Step-by-step explanation:

Earning per share is the measurement of earning attributed to the common stockholders of the company for each share of the company.

Number of outstanding shares = 400,000

Issued during the year = 200,000

Total outstanding shares = 400,000 + 200,000 = 600,000 shares

Net income for the year = $2,070,000

Earning per share = ( Net income - Preferred Dividend ) / Number of outstanding shares

Earning per share = ( $2,070,000 - $380,000 ) / 600,000 shares = $1,690,000 / 600,000 shares = $2.82 per share