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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

EPS

Junkyard Am, Inc., had earnings of $516,000 for the year. The company had 40,000 .shares of common stock outstanding during the year and issued 15,000 shares of 550 par value preferred stock. The preferred stock has a dividend of $1.60 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.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per shareNet income(loss) – Preferred dividendsAverage number of common shares outstanding

To determine: The basic earnings per share for Incorporation J for the year.

Explanation

Determine the basic earnings per share for Incorporation J for the year.

Basic earnings per share forIncorporation J for the year}Net income – Preferred dividendsAverage number of common shares outstanding=$316,000 –(Number of preferredshares×$1

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