Question

How to find earnings per share of common stock?

Earnings per Share and Multiple-Step Income Statement The following summarized data relate to Bowden Corporation's current operations: Sales revenue Cost of goods sold Selling expenses Administrative expenses Loss on sale of equipment Income tax expense Shares of common stock Outstanding at January 1 Additional issued at May 1 Additional issued at November 1 $745,000 450,000 58,000 72,000 5,000 64,000 15,000 shares 7,000 shares 2,000 shares Required Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement. Do not use negative signs with any of your answers below. BOWDEN CORPORATION Income Statement For the Year Ended December 31 Sales Revenue 745,000 Cost of Goods Sold 450,000 Gross Profit on Sales 295,000 Selling Expenses $ 58,000 Administrative Expenses 72,000 130,000 Operating Income 165,000 Loss on Sale of Equipment 5,000 Income before Taxes 160,000 Income Tax Expense 64,000 Net Income 96,000 Earnings per share of Common Stock 3*

Answer 1

$ 745,000 $ 450,000 $ 295,000 BOWDEN CORPORATION Income Statement For the Year Ended December 31 Sales Revenue Cost of goods Sold Gross Profit on Sales Selling Expenses $ 58,000 Administrative Expenses $ 72,000 Operating Income Loss on sale of Equipment Income before Taxes Income Tax expenses Net Income Earnings per share of common stock $ 130,000 $ 165,000 $ 5,000 $ 160,000 $ 64,000 $ 96,000 $ 4.00 Working Notes : Total Outstanding shares = 15,000+7,000+2,000 = 24,000 shares Earnings per Share of Common stock = Net Income avialble to common stock holders / no of outstanding shares =$96,000/24,000= $4.00