EPS Junkyard Arts Inc had earnings of 321800 for the year Th

EPS

Junkyard Arts, Inc., had earnings of $321,800 for the year. The company had 39,000 shares of common stock outstanding during the year and issued 2,200 shares of $50 par value preferred stock. The preferred stock has a dividend of $8 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

Solution

Net Income = $321,800

Preferred Share Dividend = Number of preferred shares * Dividend per share
Preferred Share Dividend = 2,200 * $8
Preferred Share Dividend = $17,600

Earnings available to Common Shareholders = Net Income - Preferred Share Dividend
Earnings available to Common Shareholders = $321,800 - $17,600
Earnings available to Common Shareholders = $304,200

Basic Earnings per share = Earnings available to Common Shareholders / Number of common shares outstanding
Basic Earnings per share = $304,200 / 39,000
Basic Earnings per share = $7.80

Basic earnings per share for Junkyard Arts for the year is $7.80