Question

Vesuvius Company has net sales revenue of $794,000, cost of goods sold of $350,200,net income of $199,200, and preferred dividends of $17,000 during the current year. At the beginning of the year, 475,000 shares of common stock were outstanding, and, at the end of the year, 551,000 shares of common stock were outstanding.A total of 8,000 preferred shares were outstanding throughout the year. The company’s earnings per share for the current year is closest to: $0.87. $0.36. $1.44. $0.93.

Answer 1

• All working forms part of the answer
• Working

A	Net Income	$              1,99,200.00
B	Preferred Dividends	$               (17,000.00)
C=A-B	Net Income available to common stockholders	$              1,82,200.00
D	Common stock-Beginning	475,000
E	Common stock-Ending	551,000
F=(D+E)/2	Average common stock shares outstanding	513,000 shares
	Earning per share = Net Income available to common shares/Average no. of common shares outstanding
G=C/F	Earning per share = [$182,200/513,000]	$                            0.36

• Hence, the correct answer is Option 2^nd: $ 0.36