Question

EPS Junkyard Arts, Inc., had earnings of $278,100 for the year. The company had 39,000 shares of common stock outstanding during the year and issued 2,400 shares of $150 par value preferred stock. The preferred stock has a dividend of $7 per share. There were no transactions in either common or preferred stock during the year. Determine the basic earnings per share for Junkyard Arts for the year. Round answer to two decimal places. per share <

Answer 1

Solution 1

Calculation of Earning Per Share of Junkyard Arts for the year

Earning per share =   Net Income-Preferred Dividends

Average number of common share outstanding

Earning per share = $278,100 - ($7 x 2400 shares)

39,000 shares

Earning per share = $ 6.70 per share

Solution 2

Part 1 Stock Dividends $110,400    (460,000 shares*2/100*$12)

Stock Dividends Distributable $36,800 (460,000 shares*2/100*$4)

Paid in capital in Excess of Par-Common Stock $ 73,600 (Balancing figure)

Part 2   Stock Dividends Distributable $36,800

Common Stock $36,800

Part 3 Total Paid-In Capital $26,40,000 ($460,000 sharesx4)+$800,000

Add :Total Retained Earnings $ 3,19,40,000

Total Stockholder's Equity $ 3,45,80,000

Part 4 Total Paid-In Capital $ 27,50,400

($460,000 shares x 4)+ $ 800,000+$110,400

Total Retained Earnings $ 3,18,29,600 ($3,19,40,000-$110,400)