Allen Lumber Company had earnings after taxes of $750,000 in the year 2009 with 300,000 shares outstanding on December 31, 2009. On January 1, 2010, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2010 earnings after taxes were 25 percent higher than in 2009. Earnings per share for the year 2010 were

Question

Quizplus · Accepted Answer

Earnings after taxes in 2010 = $750,000 x 1.25 = $937,500
Total number of shares = 300,000 + 50,000 = 350,000
Earnings per share = $937,500/350,000 = $2.68. Therefore, the correct answer is B.

Allen Lumber Company Had Earnings After Taxes of $750,000 in the Year