Textbook Problem

Lyon Company shows the following condensed income statement information for the year ended December 31, 2019:

Lyon declared dividends of $6,000 on preferred stock and $17,280 on common stock. At the beginning of 2019, 10,000 shares of common stock were outstanding. On May 1, 2019, the company issued 2,000 additional common shares, and on October 31, 2019, it issued a 20% stock dividend on its common stock. The preferred stock is not convertible.

Required:

1. 1. Compute the 2019 basic earnings per share.
2. 2. Show the 2019 income statement disclosure of basic earnings per share.
3. 3. Draft a related note to accompany the 2019 financial statements.