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Home Q & A Board Other Fields Homework Help Business Accounting
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6 years ago
Gail. Inc. has 100,000 common shares outstanding and 10,000 $5.00 preferred shares at the beginning of 2013. The company issued an additional 50,000 common shares on July 1, 2013. Gail Inc.'s net income for the year ended December 31, 2013 was $300,000; its comprehensive income was $450,000. Gail Inc. paid dividends of $50,000 during the year. What was Gail Inc.'s basic EPS for 2013?
A) $2.00
B) $2.40
C) $2.50
D) $3.20
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Exploring Microsoft Office 2013, Volume 2, Canadian Edition

Exploring Microsoft Office 2013, Volume 2, Canadian Edition


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#1
6 years ago
A
Explanation:  A) ($300,000 - $50,000)/ [(100,000 + 150,000)/2].
B) Option A is correct. You neglected to deduct the dividend on the preferred shares from net income in the numerator.
C) Option A is correct. You used 100,000 shares in your denominator, however, the weighted average number of shares outstanding was 125,000.
D) Option A is correct. You used comprehensive income in the numerator, rather than net income.
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