Question

At December 31, 2017, Albrecht Corporation had outstanding 313,000 shares of common stock and 12,000 shares...

At December 31, 2017, Albrecht Corporation had outstanding 313,000 shares of common stock and 12,000 shares of 9.5%, $100 par value cumulative, nonconvertible preferred stock. On May 31, 2018, Albrecht sold for cash 12,000 shares of its common stock. No cash dividends were declared for 2018. For the year ended December 31, 2018, Albrecht reported a net loss of $1,006,000.

Required:

Calculate Albrecht's net loss per share for the year ended December 31, 2018. (Enter your answers in thousands. Negative amounts should be indicated by a minus sign.)

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Answer #1

If a company declares dividend on preferred stock and a net loss occurs ,the company increases the loss by the amount of dividend for the reporting period.

If the preferred stock is cumulative and the company has net income but declares no dividend in the current year ,it subtracts an amount equal to the dividend that it should have declared for the current year only.

If the stock is cumulative and the company reports a net loss but declares NO dividend in the current year the loss should be increased by the amount of dividend for the year

weighted average common shares outstanding

Shares Issued Time Outstanding Total

313,000 12/12 (Jan 1 -Dec 31st ) 313,000

12,000 7/12 (June 1 - Dec 31st) 7,000

320,000

The preferred dividend would be

12,000 x $100 x 9.5% = $114,000

So EPS would be

(-$114,000 - 1,006,000) / 320,000 = - $3.5  

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