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Bramble Corp. purchased Cullumber Company and agreed to give stockholders of Cullumber Company 9300 additional shares...

Bramble Corp. purchased Cullumber Company and agreed to give stockholders of Cullumber Company 9300 additional shares in 2020 if Cullumber Company’s net income in 2019 is $505000; in 2018 Cullumber Company’s net income is $525000. Bramble Corp. has net income for 2018 of $456000 and has an average number of common shares outstanding for 2018 of 94000 shares. What should Bramble report as diluted earnings per share for 2018? (rounded to the nearest penny)

$4.85
$4.08
$4.41
$5.37
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Answer #1

Answer:

Bramble report as diluted earnings per share for 2018=4.41

Working notes for the above answer is as under

Here we are asked to calculate the diluted earnings per share for 2018 for Bramble company so we should consider the Bramble Company’s net income for 2018 and average number of common shares outstanding for 2018

Diluted earning per share

=(total income –preferred dividend) /(outstanding share + New issue)

=(456,000 -0) / (94,000+9,300)

=456000/103300

=4.41

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