Thanks At December 31 2017 the balance sheet of Tipton Corpo

Thanks,

At December 31, 2017, the balance sheet of Tipton Corporation included 5 million common shares and 2 million nonconvertible preferred shares. On July 1, 2018, Tipton issued a 2 for 1 stock split on its common shares and paid $4 million cash dividends on the preferred stock. Net income for the year ended December 31, 2018, was $28 million. Tipton\'s 2018 EPS should be:

Solution

Solution :

EPS = (Net profit - dividend on preferred shares)÷ weighted average no. Of common shares

EPS =( $28 million - $4 million ) ÷ 7.5 million

= $3.20 per share

Working :

weighted average no. Of common shares

= 5 million x 6/12 + 10 million x 6/12

= 7.5 million shares