Strict Fitness Ltd. has a December 31 year end. On January 1, 2021, the company had the following shareholder's equity accounts. Strict Fitness Ltd. had the following transactions during 2021:
The company reported net income of $ 520,000 and comprehensive income of $ 592,000 for 2021.
Instructions
a) Record all of the transactions.
b) Prepare the Statement of Changes in Shareholders' Equity.
c) Calculate Strict Fitness' 2021 earnings per share. (Hint: weighted average number of common shares outstanding has been correctly computed at 208,167 shares)

Question

Strict Fitness Ltd. has a December 31 year end. On January 1, 2021, the company had the following shareholder's equity accounts.  Strict Fitness Ltd. had the following transactions during 2021:
  The company reported net income of $ 520,000 and comprehensive income of $ 592,000 for 2021.
Instructions 
a) Record all of the transactions.
b) Prepare the Statement of Changes in Shareholders' Equity.
c) Calculate Strict Fitness' 2021 earnings per share. (Hint: weighted average number of common shares outstanding has been correctly computed at 208,167 shares)

Quizplus · Accepted Answer

The Answer is c) Cumulative dividend entitled by preferred shareholders = $ 5 x 6,500 = $ 32,500 Earnings available to common shareholders = $ 520,000 - $ 32,500 = $ 487,500 Weighted average number of common shares outstanding = 208,167 2021 EPS = $ 487,500 / 208,167 = $ 2.34 per share

c)
Cumulative dividend entitled by preferred shareholders = $ 5 x 6,500 = $ 32,500
Earnings available to common shareholders = $ 520,000 - $ 32,500 = $ 487,500
Weighted average number of common shares outstanding = 208,167
2021 EPS = $ 487,500 / 208,167 = $ 2.34 per share