Earnings per Share The 2018 balance sheet for Guthrie Corporation revealed the following information: Common stock,...
Earnings per Share
The 2018 balance sheet for Guthrie Corporation revealed the following information:
- Common stock, $10 par, 50,000 shares issued and outstanding
- Preferred stock, $100 par, 6%, cumulative stock, 1,000 shares issued and outstanding
During 2019, Guthrie reported net income of $225,000 and engaged in the following stock transactions:
| Mar. 1 | Issued 10,000 shares of common stock for cash. | |
| Apr. 1 | Reacquired 2,000 shares of common stock as treasury stock. | |
| Aug. 1 | Resold 1,000 shares of treasury stock for cash. | |
| Sept. 1 | Declared and issued a 50% stock dividend on common stock. |
Required:
3. Compute the basic EPS that would be disclosed
by Guthrie. Round your answer to 2 decimal
places.
Basic EPS
Homework Answers
Answer:
Calculation of Basic EPS
Basic EPS = Net income attributable to equity shareholders/ Weighted average no of shares
Calculation of net income attributable to equity shareholders = Net income - preference dividend
= $225000-$6000 = $219000
Calculation of weighted average no of shares
= (50000*2/12)+(60000*1/12)+(58000*4/12)+(59000*5/12)
= 57250
Basic EPS that would be disclosed by Guthrie = $219000/57250 = $3.82
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Earnings per Share
The 2018 balance sheet for Guthrie Corporation revealed the
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Common stock,...
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