On dec 31.2008 xyz corp had 600000 shares of common stock and 300000 shares of 8

Question

On dec 31.2008 xyz corp had 600000 shares of common stock and 300000 shares of 8% ,noncumulative,nonconvertible prreferd stock issued and outstanding .XYZ issued 4% common stock divident on May 15 and paid dividends of 400000 and 75000 to common and preferred shareholders ,respectively on dec.15.2009
On feb 28,2009 xyz sold 60000 common shares.In keeping with its long term share repurchase plan, 2000 shares were retired on July 1. XYZ net income for the year ended Dec ,31,2009 was 2100000. The income tax rate is 40%

Compute XYZ earnings per share for the year ended Dec 31,2009

Explanation / Answer

common stock                     =600000 shares common stock sold               =60000 shares Balance shares                      =540000 shares shares retired                         =2000 shares Total number of shares          =542000shares Net income                           =$2100000 Earning per share  =Net income/No. of shares outstanding Earning per share=2100000/542000=3.88                        

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