EPS Junkyard Arts Inc had earnings of 176600 for the year Th

EPS Junkyard Arts, Inc., had earnings of $176,600 for the year. The company had 29,000 shares of common stock outstanding during the year and issued 4,000 shares of $50 par value preferred stock. The preferred stock has a dividend of $5 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

Solution: Basic earning per share = ( Earnings - Preference dividend) ÷ number of common stock

= ($176,600 - 4,000 x $5) ÷ 29,000

= ($176,600 - $20,000) ÷ 29,000

= $5.40