Question

The Abel Company provided the following information from its financial records: Net income $ 250,000 Common shares outstanding 1/1 200,000 Common stock dividends $ 20,000 Common shares outstanding 12/31 300,000 Preferred stock dividends $ 25,000 Preferred shares outstanding 1/1 10,000 Sales $ 1,000,000 Preferred shares outstanding 12/31 6,000 What is the amount of the company's earnings per share?

Answer 1

Answer:

The amount of the company's earnings per share is $0.90 per share.

Explanation:

The formula to compute earning per share is shown below:

= (Net income - preferred stock dividend) ÷ Average number of common shares outstanding

where,

average number of common shares outstanding is equals to

= (Opening balance + ending balance) ÷ 2

= (200,000 + 300,000) ÷ 2 = 250,000  shares

Now, put the values in the above formula which is equals to

= ($250,000 - $25,000) ÷ 250,000 shares

= $0.90 per share

Hence, the amount of the company's earnings per share is $0.90 per share.