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Sage Inc. presented the following data. Net income $2,740,000 Preferred stock: 45,000 shares outstanding, $100 par, 8% cumulative, not convertible 4,500,000 Common stock: Shares outstanding 1/1 714,000 Issued for cash, 5/1 291,600 Acquired treasury stock for cash, 8/1 135,600 2-for-1 stock split, 10/1 Compute earnings per share. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share

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Answer:

$1.41 per share

Explanation:

Weighted average no of shares out standing = 1,686,800 shares

Note: See the attached excel file for the calculation of the weighted average no of shares out standing.

Preferred stock dividend = 8% * 45,000 * $100 = $360,000

Net income after preferred dividend = $2,740,000 - $360,000 = $2,380,000

Earnings per share = Net income after preferred dividend / Weighted average no of shares out standing = $2,380,000 / 1,686,800 = $1.41 per share

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