Financial statement data for this year and last year for Hanscombe Corp. are as follows: $$\begin{array} { l r r }
& \text { Current Year } & \text { Last Year } \
\text { Net income } & \$ 5,600,500 & \$ 4,988,000 \
\text { Preferred dividends } & 60,000 & 60,000 \
\text { Average number of common shares outstanding } & 125,000 & 110,000
\end{array}$$
Earnings per share for each year were
A) Current year: $44.32; Last year: $44.80
B) Current year: $44.80; Last year: $44.32
C) Current year: $44.80; Last year: $45.35
D) Current year: $45.35; Last year: $44.80

Question

Financial statement data for this year and last year for Hanscombe Corp. are as follows:   $$\begin{array} { l r r } 
& \text { Current Year } & \text { Last Year } \
\text { Net income } & \$ 5,600,500 & \$ 4,988,000 \
\text { Preferred dividends } & 60,000 & 60,000 \
\text { Average number of common shares outstanding } & 125,000 & 110,000
\end{array}$$  
Earnings per share for each year were
A) Current year: $44.32; Last year: $44.80
B) Current year: $44.80; Last year: $44.32
C) Current year: $44.80; Last year: $45.35
D) Current year: $45.35; Last year: $44.80

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as (Net Income - Preferred Dividends) / Average Number of Common Shares Outstanding. For the current year: (5,600,500 - 60,000) / 125,000 = 44.32. For last year: (4,988,000 - 60,000) / 110,000 = 44.80.

Financial Statement Data for This Year and Last Year for Hanscombe