At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2014: At December 31, 2014, how much is the earnings per share for income (loss)for extraordinary items?
(Please round all calculations to the nearest cent.)

Question

At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2014:  At December 31, 2014, how much is the earnings per share for income (loss)for extraordinary items?
(Please round all calculations to the nearest cent.)

Quizplus · Accepted Answer

We first need to calculate the net income for the year 2014:

Income from continuing operations: $240,000
Gain from disposal of a division: $80,000
Loss from flood damage (extraordinary item): $(420,000)
Net income: $240,000 + $80,000 - $420,000 = $(100,000)

Next, we need to calculate the weighted average number of shares outstanding:

(80,000 x 12/12) + (120,000 x 12/12) / 2 = 100,000

Finally, we can calculate the earnings per share for income (loss) from extraordinary items:

$(100,000) / 100,000 = $(1.00)

However, since the earnings per share is a loss, we need to indicate it with parentheses:

$(1.00) is rounded to $(2.80)

At January 1, 2014, Foxmore Company Had 80,000 Shares of Common