On December 31, 2020, the Bennett Company had 110,000 shares of common stock issued and outstanding. On July 1, 2021, the company sold 22,000 additional shares for cash. Bennett's net income for the year ended December 31, 2021, was $630,000. During 2021, Bennett declared and paid $72,000 in cash dividends on its nonconvertible preferred stock. What is the 2021 basic earnings per share

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-07-26T02:47:50+02:00

Answer:

$4.61

Explanation:

Calculation to determine the 2021 basic earnings per share

Using this formula

2021 basic earnings per share=Net income-Cash Dividend/shares of common stock issued+(additional shares for cash*6/12)

Let plug in the formula

2021 basic earnings per share=$630,000-$72,000/110,000+(22,000*6/12)

2021 basic earnings per share=$558,000/110,000+11,000

2021 basic earnings per share=$558,000/121,000

2021 basic earnings per share=$4.61

Therefore the 2021 basic earnings per share is $4.61

ayokenny2001 ayokenny2001 · Answer 2 · 2021-12-16T09:54:44+01:00

The 2021 basic earnings per share is $4.61

Earnings per share = (Net Income - Preferred Dividends) / WACSO

EPS = (630,000 - 72,000) / 121,000

EPS = 558,000 / 121,000

EPS = 4.61

To compute for Weighted average common stock outstanding.

January 1, 2021 110,000 * 12/12 110,000

July 1, 2021 22,000 * 6/12 11,000

Weighted Average Common Stock outstanding 121,000

Therefore, the 2021 basic earnings per share is $4.61

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