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That Wich Corp. had additions to retained earnings for the year just ended of $357,482. The firm...

Question:

That Wich Corp. had additions to retained earnings for the year just ended of $357,482. The firm paid out $211,462 in cash dividends, and it has ending total equity of $4,965,548. The company currently has 150,000 shares of common stock outstanding. What are earnings per share?

Retained Earnings:

The amount of net income that remains after the cash dividends are paid by the company to the shareholders is called the retained earnings. It is the income retained for the purpose of being used for reinvestment in the future without needing external financing. The undistributed net income is accumulated each year to the retained earnings account and it belongs to the common shareholders.

Answer and Explanation:


Answer:

That Wich Corp's earnings per share are $3.79.

Explanation:

That Wich Corp. has shared the following data:

  • Additions to retained earnings = $357,482
  • Dividends paid = $211,462
  • Ending total equity = $4,965,548
  • Number of shares of common stock = 150,000 shares

Computation:

The first step is to determine the net income:

  • Net income = Additions to retained earnings + Cash dividends paid
  • Net income = $357,482 + $211,462
  • Net income = $568,944

The second step is to derive the earnings per share (EPS):

  • EPS = (Net income - Preferred dividend) / Number of shares of common stock
  • EPS = ($568,944 + $0) / 150,000 shares
  • EPS = $3.79

Learn more about this topic:

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How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
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