For 2012, Flamingo Products had net income of $1,000,000. At 1 January 2012, there were 1,000,000 shares outstanding. On 1 July 2012, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is Flamingo's basic earnings per share for 2009?

Question

contestada

Respuesta :

jafruevu jafruevu · Answer 1 · 2020-03-17T19:19:54+01:00

Answer:

Earnings per share = 0.95

Explanation:

We know,

Earnings per share = (Net Income - Prefer Dividend) ÷ Number of weighted average outstanding share.

Given,

Net Income = $1,000,000

Prefer Dividend = 0

Number of weighted average outstanding share =

January 1 2012 = 1,000,000 × 12/12 = 1,000,000 Shares

July 1 2012 = 100,000 × 6/12 = 50,000 Shares

Number of weighted average outstanding share = 1,050,000 Shares

Putting the value into the formula we can get that,

Earnings per share = (Net Income - Prefer Dividend) ÷ Number of weighted average outstanding share.

or, Earnings per share = ($1,000,000 - 0) ÷ 1,050,000

or, Earnings per share = $1,000,000 ÷ 1,050,000

or, Earnings per share = 0.95