Financial statement data for the years ended December 31 for Dovetail Corporation follow: 20Y3 20Y2 Net income $448,750 $376,000 Preferred dividends $40,000 $40,000 Average number of common shares outstanding 75,000 shares 60,000 shares a. Determine the earnings per share for 20Y3 and 20Y2. Round your answers to two decimal places.

Question

Dusty

Business

24 October, 17:12

Financial statement data for the years ended December 31 for Dovetail Corporation follow: 20Y3 20Y2 Net income $448,750 $376,000 Preferred dividends $40,000 $40,000 Average number of common shares outstanding 75,000 shares 60,000 shares a. Determine the earnings per share for 20Y3 and 20Y2. Round your answers to two decimal places.

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Jabari Zavala · Answer 1

Earnings per share on common equity

20Y3 = 408,750/75,000 = $5.45

20Y2 = 336,000/60,000 = $5.60

Explanation:

As for the information provided we have,

Each year income as given

20Y3 = $448,750

20Y2 = $376,000

Preference Dividend for each year as given

20Y3 = $40,000

20Y2 = $40,000

Average common stock outstanding shares at each year end

20Y3 = 75,000 shares

20Y2 = 60,000 shares

Therefore, income for equity, for each year

20Y3 = $448,750 - $40,000 = $408,750

20Y2 = $376,000 - $40,000 = $336,000

Thus, Earnings per share on common equity

20Y3 = 408,750/75,000 = $5.45

20Y2 = 336,000/60,000 = $5.60