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The Common Stock account for Baltimore Corporation on January 1, 2018, was $50,000. On July 1,...

Question:

The Common Stock account for Baltimore Corporation on January 1, 2018, was $50,000. On July 1, 2018, Baltimore issued an additional 10,000 shares of common stock. The Common Stock is $5 par. There was neither Preferred Stock nor any Treasury Stock. Paid in Capital Excess to par Common Stock was $20,000 on January 1 and $40,000 on July 2 and net income was $140,500. Use this information to determine for December 31, 2018, the amount of Earnings per Share.

Earnings per Share:

Earnings per share shows the how much does the stocks of the company earns. This is the portion of the earnings allocated for the company's outstanding shared. It is computed by dividing the net income over the average number of outstanding shares.

Answer and Explanation:

Common Stock-January 1 50,000
Par Value 5
Outstanding Common Shares-January 1 10,000
Issuance-July 1 10,000
Total outstanding Common Shares 20,000


{eq}\begin{align*} Earnings~per~Share&=\frac{Net~Income}{Common~Shares~Outstanding}\\ &=\frac{140,500}{20,000}\\ &=7.025 \end{align*} {/eq}


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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