Question

Catena's Marketing Company has the following adjusted trial balance at the end of the current year. Cash dividends of $600 were declared at the end of the year, and 660 additional shares of common stock ($0.10 par value per share) were issued at the end of the year for $2,640 in cash (for a total at the end of the year of 820 shares). These effects are included below:

Catena's Marketing Company has the following adjusted trial balance at the end of the current year. Cash dividends of $600 were declared at the end of the year, and 660 additional shares of common stock ($0.10 par value per share) were issued at the end of the year for $2,640 in cash (for a total at the end of the year of 820 shares). These effects are included below: 3,720 Catena's Marketing Company Adjusted Trial Balance End of the Current Year Debit Credit Cash $ 1,690 Accounts receivable 2,320 Interest receivable 160 Prepaid insurance 1,770 Long-term notes receivable 2,830 Equipment 16,300 Accumulated depreciation $ 2,960 Accounts payable Dividends payable Accrued expenses payable Income taxes payable 2,620 Unearned rent revenue 310 Common Stock (820 shares) Additional paid-in capital 3,428 Retained earnings 4,710 Sales revenue 37,550 Interest revenue 150 Rent revenue Wages expense 18,700 Depreciation expense 1,770 Utilities expense 370 Insurance expense 790 Rent expense 9,600 Income tax expense 2,760 Total $ 59,060 $ 59,060 82

Answer 1

Earning per share = Net income / Weighted average outstanding common stock

Weighted average outstanding common shares = Beginning common stock + Ending common stock / 2

Weighted average outstanding common shares = 160 + 820 / 2 = 490

Earning per share = $4,320 / 490 = $8.82