During 2013, Moore Corp. had the following two classes of stock issued and outstanding for the...

Question:

During 2013, Moore Corp. had the following two classes of stock issued and outstanding for the entire year:

100,000 shares of common stock, $1 par.

1,000 shares of 4% preferred stock, $100 par, convertible share for share into common stock.

Moore's 2013 net income was $900,000, and its income tax rate for the year was 30%. In the computation of diluted earnings per share for 2013, the amount to be used in the numerator is:

(a) $896,000

(b) $898,800

(c) $900,000

(d) $901,200

Earnings per share:

Earnings per share are the number of profits that a company earns which is attributed to common shareholders. The ratio tests the quality of a company?s earnings.

Answer and Explanation:


The company is (a) $896,000.


Diluted earnings per share is calculated by subtracting net income from preferred dividends and then dividing the result by the weighted average shares of stock outstanding.


  • (1,000 shares x $100 par) x 4% = $4,000 preferred stock dividends
  • \frac\{($900,000 - $4,000)}{100,000}
  • $896,000 profits attributed to common stock / 100,000 shares
  • $8.96 diluted earnings per share.

Learn more about this topic:

Loading...
How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
110K

Related to this Question

Explore our homework questions and answers library