Flyaway Travel Company reported net income for 2018 in the amount of $90,000. During 2018, Flyaway declared and paid $2,125 in cash dividends on its nonconvertible preferred stock. Flyaway also paid $10,000 cash dividends on its common stock. Flyaway had 40,000 common shares outstanding from January 1 until 10,000 new shares were sold for cash on April 1, 2018. What is 2018 basic earnings per share?
A) $1.85.
B) $1.64.
C) $1.76.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

$\frac{\$ 90,000-2,125}{40,000+(10,000 \times 9 / 12)}=\frac{\$ 87,875}{47,500}=\$ 1.85$

Flyaway Travel Company Reported Net Income for 2018 in the Amount