Question

At December 31, 2021, Bonita Industries had 508000 shares of common stock issued and outstanding, 396000 of which had been issued and outstanding throughout the year and 112000 of which were issued on October 1, 2021. Net income for the year ended December 31, 2021, was $1705000. What should be Bonita's 2021 earnings per common share, rounded to the nearest penny? $4.02 $4.31 $3.77 $36.18

Answer 1

$4.02 per share

Step-by-step explanation:

The computation of the earning per share is shown below:

Earning per share = (Net income) ÷ (weighted average number of outstanding shares)

where,

Net income is $1,705,000

And, the weighted average number of shares is

= (396,000 shares + 112,000 × 3 months ÷ 12 months)

= 424,000 shares

So, the earning per share is

= ($1,705,000) ÷ (424,000 shares)

= $4.02 per share