On December 31, 2015, Berclair Inc. had 240 million shares of common stock and 5

Question

On December 31, 2015, Berclair Inc. had 240 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2016, Berclair purchased 36 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2016. Six million treasury shares were sold on October 1. Net income for the year ended December 31, 2016, was $250 million.

Compute Berclair's earnings per share for the year ended December 31, 2016. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).

Numerator / Denominator = Earnings Per Share

Explanation / Answer

Berclair Inc No in Million Date Common Stock Tearsury Stock Outstanding Common stock Jan 1.2016.                             240                   -                240 Mar 1.2016                             240                  36              204 Jul 1 Stock dividend 5% on 204 Million =204*0.05=10 M                             250                  36              214 Oct 1.                             250                  30              220 Outstanding Common stock on Dec31.2016.              220 Million Preference shares outstanding                 5,000,000 Par value @ $100            500,000,000 Dividend Payable per year @9%               45,000,000 Net Income for the year ended Dec 312016.                             250 million Less Preference Dividend Payable                               45 million Net Income available for common stock holders                             205 million Outstanding Common stock on Dec31.2016.                             220 million Earning Per share=205/220= $                       0.93

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