On December 31,2015,the Frisbee Company had 250,000 shares of common stock issued and outstanding.On March 31,2016,the company sold 50,000 additional shares for cash.Frisbee's net income for the year ended December 31,2016,was $700,000.During 2016,Frisbee declared and paid $80,000 in cash dividends on its nonconvertible preferred stock.What is the 2016 basic earnings per share (rounded)?

Question

Quizplus · Accepted Answer

Basic EPS = Net income - Preferred dividends / Weighted average number of common shares outstanding= (700,000 - 80,000) / (250,000 + (50,000 * 9/12))= 620,000 / 275,000= $2.25 (rounded to $2.16)

On December 31,2015,the Frisbee Company Had 250,000 Shares of Common