At December 31,2014,the Carboneer Company had 150,000 shares of common stock issued and outstanding.On April 1,2015,an additional 30,000 shares of common stock were issued.Carboneer's net income for the year ended December 31,2015,was $517,500.During 2015,Carboneer declared and paid $300,000 in cash dividends on its nonconvertible preferred stock.The basic earnings per common share,rounded to the nearest penny,for the year ended December 31,2015,should be

Question

Quizplus · Accepted Answer

First, we need to find the weighted average number of common shares outstanding for the year. The calculation is:

Weighted average common shares outstanding = [(Number of shares outstanding for part of the year x portion of year) + (Number of shares outstanding for entire year x portion of year)]

= [(150,000 x 3/12) + (180,000 x 9/12)]

= (37,500 + 135,000)

= 172,500

Next, we can calculate the earnings per common share:

Earnings per common share = (Net income - Preferred stock dividends) / Weighted average common shares outstanding

= ($517,500 - $300,000) / 172,500

= $217,500 / 172,500

= $1.26

Therefore, the basic earnings per common share for the year ended December 31, 2015 is $1.26, which is closest to choice D.

At December 31,2014,the Carboneer Company Had 150,000 Shares of Common