At December 31,2013,MNO had 50,000 common shares issued and outstanding.On April 1,2014,an additional 10,000 common shares were issued.MNO's net income for the year ended December 31,2014,was $1,035,000.During 2014,MNO declared and paid $600,000 cash dividends on its nonconvertible preferred shares (the full year's requirement).The earnings per common share,rounded to the nearest cent,for the year ended December 31,2014,should be:

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), subtract preferred dividends from net income and divide by the weighted average number of common shares. Net income is $1,035,000, and preferred dividends are $600,000, leaving $435,000 for common shareholders. The weighted average shares are 50,000 + (10,000 * 9/12) = 57,500. EPS = $435,000 / 57,500 = $7.57.

At December 31,2013,MNO Had 50,000 Common Shares Issued and Outstanding