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EPS - Price Company

On January 1 of the current year, Price Company had 66,000 shares of $38 par common stock issued and outstanding and 16,000 shares of noncumulative 5%, $150 par preferred stock issued and outstanding.

On October 1, Price Company issued an additional 24,600 common shares and another 27,600 common shares on December 1. Net income for the year was $737,000.

Required:
Compute basic earnings per share of common stock. Round your answer to the nearest cent.
Hint :Weighted average number of common shares outstanding:
To compute the weighted average, multiply each stock issuance by the fraction of the year remaining:

Recapping:
Earnings per share = Net income - Preferred annual dividend requirement

Weighted average number of common shares outstanding

Solution Preview

Weighted average number of common shares:

66,000 shares x 9/12 = 49500 shares
(66000+24600=90600) ...

Solution Summary

The solution computes basic earnings per share of common stock. The weighted average number of common shares are determined.

$2.19