Question

Crystal Arts, Inc., had earnings of $344,400 for 2016. The company had 28,000 shares of common...

Crystal Arts, Inc., had earnings of $344,400 for 2016. The company had 28,000 shares of common stock outstanding during the year. In addition, the company issued 2,800 shares of $100 par value preferred stock on January 3, 2016. The preferred stock has a dividend of $6 per share. There were no transactions in either common or preferred stock during 2016.

Determine the basic earnings per share for Crystal Arts. Round answer to two decimal places.
$per share

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Answer #1
Ans. Earning Per Share = Earnings available for Equity holders (W.N.1) / Total share outstanding
= $ 327,600 / 28,000 shares
= $                   11.68
Working Notes:
1) Earnings available for equity holders= Earnings during the year - Preffered stock Dividend
= $ 344,400 - ( 2800 shares x $6 )
= $344,400 - $ 16,800
= $    327,600
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