Question

At December 31, 2021 and 2020, Sheridan Company had 171000 shares of common stock and 12000 shares of 7%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2021 or 2020. Net income for 2021 was $442000. For 2021, earnings per common share amounted to (rounded to the nearest penny)

Answer 1

Answer:

The earnings per common share amounted to $2.53

Explanation:

Solution

Given that:

The Net Income for 2021= $442000

Thus,

The Dividend to be accrued on Preference shares for 2021 = 1200 *7% * 100

= $8400

The Earnings available to common share-holders for 2021 =$442000-$8400

= $433600

The number of common shares outstanding is = 171000 shares

So,

The Basic Earnings per share = 433600/171000

= $2.53