EX 13-23 EPS

Malen Arts, Inc., had earnings of $133,750 for 2012. The company had 25,000 shares of common stock outstanding during the year. In addition, the company issued 10,000 shares of $100 par value preferred stock on January 3, 2012. The preferred stock has a dividend of $4 per share. There were no transactions in either common or preferred stock during 2012.

Determine the basic earnings per share for Malen Arts.


Answer:

Earnings per Share = Avg.Number of Common Shares Outstanding
Net Income − Preferred Dividends
Earnings per Share = ( )
25,000 shares
$133,750 − $4 per share × 10,000 shares
Earnings per Share = $3.75 per share 

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