At December 31, 2014 Pine Company had 200,000 shares of common stock and 10,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2014 or 2015. On February 10, 2016, prior to the issuance of its financial statements for the year ended December 31, 2015, Pine declared a 100% stock dividend on its common stock. Net income for 2015 was $800,000. In its 2015 financial statements, Pine's 2015 earnings per common share should be

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The earnings per share (EPS) calculation for 2015 must consider the stock dividend as if it had occurred at the beginning of the year because stock dividends and splits are treated retroactively in EPS calculations. The 100% stock dividend doubles the number of common shares to 400,000. Before calculating EPS, we must account for the preferred dividends. The annual preferred dividend is 10,000 shares * $100 par value * 5% = $50,000. The net income available for common shareholders is $800,000 - $50,000 = $750,000. Therefore, the EPS for 2015 is $750,000 / 400,000 shares = $1.88.

At December 31, 2014 Pine Company Had 200,000 Shares of Common