Problem

The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year.a.  ...

The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year.

a.   Compute the amount of earnings per share assuming that the shares of capital stock outstanding throughout the year consisted of:

  1.  400000 shares of $1 par value common stock and no preferred stock.

  2.   100,x000 shares of 8 percent. $ 100 par value preferred stock and 300,000 shares of $5 par value common stock.


b.   Is the earnings per share figure computed in part a(2) considered to be basic or diluted? Explain.

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