Question 6 7 points Jennifer Corporation has one class of co

Question 6 (7 points) Jennifer Corporation has one class of common stock with a par value of $5. There is no Treasury Stock balance as of January 1, 2017. On January 1, 2017 Jennifer had a $80,000 balance in its Common Stock account. On October 1, 2017 Jennifer issued an additional 3,400 shares of common stock for $20,400. There is no class of preferred stock outstanding during FY 2017. Use this information to determine the Net Income or (Net Loss) for Jennifer if It reports an earnings per share of $4.70.

Solution

“Net Income for Jennifer Corporation = $ 79,195”

Earnings per share = Net Income / Weighted average number of common shares outstanding

Weighted average number of common shares outstanding

= [$80,000 / $5] + [3,400 Shares x 3/12]

= 16,000 Shares + 850 Shares

= 16,850 Shares

Earnings per share = Net Income / Weighted average number of common shares outstanding

$4.70 = Net Income / $16,850

Therefore, Net Income

= $16,850 x $4.70

= $ 79,195