Charlotte Engineering experienced net income of $450,000 for the year.It declared $30,000 in preferred dividends on December 23.It began the year with 100,000 common shares outstanding.On July 1,Charlotte declared a 10% common stock dividend.Compute the basic EPS for the year.

Question

Quizplus · Accepted Answer

To calculate the basic EPS, we first need to adjust the number of common shares for the stock dividend. The stock dividend increases the shares by 10%, so the adjusted shares are 110,000. The net income available to common shareholders is $450,000 - $30,000 = $420,000. Basic EPS = $420,000 / 110,000 = $3.82.

Charlotte Engineering Experienced Net Income of $450,000 for the Year