On December 31, 2012, the Frisbee Company had 250,000 shares of common stock issued and outstanding. On March 31, 2013, the company sold 50,000 additional shares for cash. Frisbee's net income for the year ended December 31, 2013, was $700,000. During 2013, Frisbee declared and paid $80,000 in cash dividends on its nonconvertible preferred stock. What is the 2013 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, 2012, the Frisbee Company Had 250,000 Shares