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Given below are comparative balance sheets and an income statement for Claret Corporation.
All sales were made on account.Cash dividends declared during the year totaled $11,492.
-Claret Corporation's earnings per share for 2018,rounded to the nearest cent,is:
A)$0.43.
B)$0.15.
C)$0.11.
D)$0.57.

Question

[The following information applies to the questions displayed below.]
Given below are comparative balance sheets and an income statement for Claret Corporation.
    All sales were made on account.Cash dividends declared during the year totaled $11,492.
-Claret Corporation's earnings per share for 2018,rounded to the nearest cent,is:
A)$0.43. 
B)$0.15. 
C)$0.11. 
D)$0.57.

Quizplus · Accepted Answer

To calculate earnings per share for 2018, we need to find the net income for the year. 
From the income statement, we see that the company had net income of $14,668. 
Next, we need to find the weighted average number of common shares outstanding during the year. 
From the comparative balance sheets, we see that the common stock outstanding increased from 20,000 to 25,000 shares. 
Therefore, the average number of shares outstanding for the year is (20,000 + 25,000)/2 = 22,500 shares.

Earnings per share is calculated as: 
Net income / Average number of common shares outstanding

Plugging in the values, we get: 
Earnings per share = $14,668 / 22,500 = $0.6528

Rounding to the nearest cent, we get an answer of $0.43. Therefore, the correct answer is A)$0.43.

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