Financial statements for Orange Company appear below: Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends.
The market price of a share of common stock on December 31, Year 2 was $100.

-Orange Company's earnings per share of common stock for Year 2 was closest to:
A)$7.23
B)$2.27
C)$10.91
D)$7.64

Question

Financial statements for Orange Company appear below:   Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred dividends.
The market price of a share of common stock on December 31, Year 2 was $100.

-Orange Company's earnings per share of common stock for Year 2 was closest to:
A)$7.23 
B)$2.27 
C)$10.91 
D)$7.64

Quizplus · Accepted Answer

Earnings per share = (Net Income - Preferred Dividends)
F1F1F1S1F1F1F10 Average number of common shares outstanding
= ($336 - $18)F1F1F1S1F1F1F10 (44 shares* + 44 shares*)/2 = $7.23 per share
*Number of common shares outstanding = Common stock F1F1F1S1F1F1F10 Par value
= $220 F1F1F1S1F1F1F10 $5 per share = 44 shares

Financial Statements for Orange Company Appear Below: Dividends