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What should be the 2005 earnings per common share of Tam Company, rounded to the nearest penny?

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The Tam Company's net income for the year ended December 31, 2005 was $10,000. During the year, Tam declared and paid $1,000 cash dividends on preferred stock and $1,750 cash dividends on common stock. At December 31, 2005 the company had 12,000 shares of common stock issued and outanding-10,000 had been issued and outstanding throughout the year and 2,000 were issued on July 1, 2005. There were no other common stock transactions during the year, and the 5,000 shares of preferred stock are not convertible into common shares.

Required:
What should be the 2005 earnings per common share of Tam Company, rounded to the nearest penny?

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Solution Summary

Computation of EPS shown step-by-step in the solution.

$2.19