Based on the following facts, prepare the Ear»ings per share amounts for X Corp.

Question

Based on the following facts, prepare the Ear»ings per share amounts for X Corp. for 2014 under the: A-Basic EPS and B-Diluted EPS methods. Common Shares Outstanding as of 1/1/2014 is 100,000 shares. On October 1, 2015 the company issued 10,000 shares of common stock to the public. On June 5, 2014 the company declared a 5 percent stock dividend. Additionally, the Corporation has $500,000 of 6%, $100 par Convertible Preferred Stock. Each Preferred Stock is converted into 6 shares of common stock. Net Income for 2014 was $150,000.

Explanation / Answer

Earning per share = (Net income-Preferred dividend)/Share outstanding

= (150000-500000*6%)/105000

Earning per share = 1.14 per share

Diluted earning per share = Adjusted net income/Adjusted Diluted share

= 150000/(100000+5000+30000)

Diluted earning per share = 1.11 per share

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