On January 1, 2010, Libby 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.The earnings per share for the year was

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as (Net Income - Preferred Dividends) / Weighted Average Shares Outstanding. Here, EPS = ($110,800 - $36,000) / [(18,000 * 6/12) + (16,000 * 6/12)] = $4.40.

On January 1, 2010, Libby Corporation Had 18, 000 Shares