Question

At December 31, 2018 and 2017, G Co. had 60,000 shares of common stock and 11,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2018 or 2017. Net income for 2018 was $550,000. For 2018, basic earnings per common share amounted to: (Round your answer to 2 decimal places.)

Answer 1

$8.25

Step-by-step explanation:

The computation of basic earnings per common share is shown below:-

Dividend to be accrued on Preference shares = 11,000 × 100 × 5%

= $55,000

Earnings available to common share holders = $550,000 - $55,000

= $495,000

Basic Earnings per share = Earnings available to common share holders ÷ Shares of common stock

= $495,000 ÷ $60,000

= $8.25