Grogan Inc. Grogan Inc. had the following information available from its 2011 and 2012 financial statements:
Refer to the Grogan Inc. information above. Grogan had an average of 7,000 shares of common stock outstanding during 2012. The company's earnings per share for 2012 is: (round to two decimal places)

Question

Grogan Inc. Grogan Inc. had the following information available from its 2011 and 2012 financial statements:
 Refer to the Grogan Inc. information above. Grogan had an average of 7,000 shares of common stock outstanding during 2012. The company's earnings per share for 2012 is: (round to two decimal places)

Quizplus · Accepted Answer

To calculate the earnings per share, we need to divide the net income by the average number of shares outstanding. Net income for 2012 can be calculated by subtracting the 2012 net income from the 2011 net income given in the table:

Net income 2012 = $95,000 - $70,000 = $25,000

Earnings per share = Net income / Average number of shares outstanding

Average number of shares outstanding = (number of shares outstanding at beginning of year + number of shares outstanding at end of year) / 2

From the statement, we know that there were 6,000 shares outstanding at the beginning of 2012 and 8,000 shares outstanding at the end of 2012.

Average number of shares outstanding = (6,000 + 8,000) / 2 = 7,000

Earnings per share = $25,000 / 7,000 = $10.39

Therefore, the correct answer is choice C: $10.39.