Rawdon Corporation's net operating income in Year 2 was $52,429, net income before taxes was $34,429, and the net income was $24,100. Total common stock was $360,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $976,000 and at the end of Year 1 to $960,000. The company's earnings per share for Year 2 is closest to:
A) $0.58 per share
B) $0.38 per share
C) $0.27 per share
D) $5.84 per share

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by dividing the net income by the total number of shares. Given the net income of $24,100 and total common stock of $360,000 with a par value of $4 per share, the number of shares is $360,000 / $4 = 90,000 shares. Therefore, EPS = $24,100 / 90,000 = $0.2677, which rounds to $0.27 per share.

Rawdon Corporation's Net Operating Income in Year 2 Was $52,429