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EPS simple capital structure

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On January 1, 2010, Bio Industries had stock outstanding as follows.
8% Noncumulative preferred stock, $100 par value, issued and outstanding 250,000 shares $25,000,000
Common stock, $1 par value, issued and outstanding 600,000 shares 600,000
To acquire the net assets of three smaller companies, Bio issued an additional 600,000 common shares.
The acquisitions took place as follows.
Date of Acquisition Shares Issued
MicroBio February 1, 2010 200,000
BioTech June 1, 2010 80,000
SuperBio November 1, 2010 320,000
On December 31, 2010, Bio recorded net income of $9,862,000 before taxes. No dividends on the common
or preferred were declared during 2010.

Assuming a 40% tax rate, compute the earnings per share data that should appear on the financial statements
of Bio Industries as of December 31, 2010.

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Solution Summary

Your tutorial is attached and mentions the rule with preferred when no dividends are declared.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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