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24 April, 08:07

On January 1, 2016, Laura Corporation had 18,000 shares of common stock outstanding, and reacquired 2,000 shares on July 1. The company earned net income of $110,800 and paid a cash dividend on its preferred stock of $36,000. What was the basic earnings per share for the year

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  1. 24 April, 08:14
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    Basic EPS is $4.40

    Explanation:

    basic earnings per share=earnings attributable to common stock/weighted average number of common stock

    earnings attributable to common stock=net income-preferred stock dividend

    net income is $110,800

    preferred stock dividend is $36000

    earnings attributable to common stock=$110,800-$36,000

    =$ 74,800.00

    Weighted average number of stock

    18000 shares * 12/12 18,000

    2000 shares * 6/12 (1000)

    Weighted average 17000

    Earnings per share=$74,800/17000

    =$4.4
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