eBook Calculator EPS Crystal Arts Inc had earnings of 517500

eBook Calculator EPS Crystal Arts, Inc., had earnings of $517,500 for 2016. The company had 51,000 shares of common stock outstanding during the year. In addition, the company issued 3,000 shares of $50 par value preferred stock on January 3, 2016. The preferred stock has a dividend of $11 per share. There were no transactions in either common or preferred stock during 2016. Determine the basic earnings per share for Crystal Arts. Round answer to two decimal places. per share

Solution

It is given that earnings for 2016 of the company is $517,500.

Dividend for preferred stock is $11 per share, which amounts to $33,000 preferred dividend in total.

Earnings remaining to equity stock = $517,500 - $33,000 = $484,500

Total number of equity shares of the company is 51,000 outstanding.

Basic earnings per share is arrived by dividing the earnings available to equity share holders with total weighted average no. of equity shares outstanding, by doing so we get the basic earnings per share as

$9.50 ($484,500 ÷ 51,000).

Therefore, basic earnings per share is $9.50