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    Earnings per share for common stock

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    Gwinnett Park Co. reported net income of $916,800 for its fiscal year ended September 30, 2011. At the beginning of that year, 150,000 shares of common stock were outstanding. On February 1, 2011, an additional 30,000 shares were issues. On August 1, 2011, 12,000 shares were purchased as treasury stock. During the year, the company paid the annual dividend on 44,000 shares at 8%, $60 par value preferred stock that were outstanding during the entire fiscal year. Calculate the earnings per share of common stock for the year ended September 30, 2011.

    Please show step by step process to your answer.

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    Solution Preview

    EPS = (Net Income - Preferred Dividends)/Weighted average common shares
    The first step is to calculate the weighted average common shares. This is calculated as
    150,000 shares are ...

    Solution Summary

    The solution explains the calculation of earnings per share for common stock within the context of business accounting.