Check my work mode : This shows what is correct or incorrect for the work you he

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Check my work mode : This shows what is correct or incorrect for the work you heve completed so fer. It does not indicate comp 8 On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%. nonconvertible preferred stock issued and outstanding Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018. 10 On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1, Dow's net income for the year ended December 31, 2018, was $2100,000 The income tax rate is 40% Required Compute Dow's earnings per share for the year ended December 31, 2018. (Do not round intermediate calculations. Enter your answers in thousands.) lete but not entirely 1.83 1,185,000 648,500 Prey 8 of 8Nex

Explanation / Answer

Calculation of Weighted average no of shares Particulars No of shares No of months Stock dividend Calculation Weighted average shares Shares outstanding as on Dec 31, 2017 600000 12 4% (600,000*12/12)*104% 624000 Shares issued on Feb 28, 2018 60000 10 4% (60000*10/12*104%) 52000 Less: Shares repurchased                 2,000 6 -(2000*6/12) -1000 Weighted average no of shares 675000 Calculation of earnings available to equity holders Net Income $2,100,000 Less; Preference dividend paid ($75,000) Income available for equity holders $2,025,000 Earnings per share = Income available for equity holders/Weighted average no of shares Weighted average no of shares in thousands 675 Income available for equity holders in thousands $2,025 Earnings per share ($2025/675) $3.00

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