On January 1, 2016, Samuel Company had 21,000 shares of common stock outstanding and issued an additional 4,500 shares on May 1. The company declared and paid a cash dividend of $45,000 and earned $375,000 net income. What was the basic earnings per share for the year?

Question

Quizplus · Accepted Answer

Basic earnings per share = Net income / Weighted average number of shares outstandingWeighted average number of shares outstanding = (21,000 x 12/12) + (4,500 x 7/12) = 22,500 sharesBasic earnings per share = $375,000 / 22,500 shares = $15.63

On January 1, 2016, Samuel Company Had 21,000 Shares of Common