Sunland Company had 299000 shares of common stock issued and outstanding at Dece

Question

Sunland Company had 299000 shares of common stock issued and outstanding at December 31, 2017. No common stock was issued during 2018. On January 1, 2018, Sunland issued 210000 shares of nonconvertible preferred stock. During 2018, Sunland declared and paid $109000 cash dividends on the common stock and $80000 on the preferred stock. Net income for the year ended December 31, 2018 was $624000. What should be Sunland's 2018 earnings per common share? (rounded to the nearest penny) $1.45 $2.09 $1.82 $1.72

Explanation / Answer

Ans .   $1.82         [option 3rd] EPS = (Net income - dividends on preferred stock) / Average outstanding common shares (624000 - 80000) / 299000 544000 / 299000 $1.82 * There is no outstanding common shares in 2018 so, average outstanding common shares = 299000

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