Homework Answers
1. Basic EPS is calculated as net income minus preferred dividends divided by the weighted-average number of common stock shares outstanding.
EPS = (Net income - preferred dividends) /weighted average of common shares outstanding during the period
Net income is $750,000.
There are no preferred dividends, and there are 200,000 shares
of common stock outstanding throughout the year.
EPS =(Net income - preferred dividends) /weighted average of common
shares outstanding during the period
=($750,000-$0) / 200,000 shares
= $3.75 per share
2. The correct answer will be option (b) In the balance sheet as a component of shareholders' equity. It is because accumulated other comprehensive income do not cause a change in a company's retained earnings nor it affects company's net income and so it is reported as a component of shareholders' equity. The other options (a) and (c) are not correct because of the above reason.
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