On December 31, 2017, Dow Steel Corporation had 630,000 shares of common stock a
ID: 2536693 • Letter: O
Question
On December 31, 2017, Dow Steel Corporation had 630,000 shares of common stock and 33,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $430,000 and $72,000 to common and preferred shareholders, respectively, on December 15, 2018.
On February 28, 2018, Dow sold 54,000 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 $2,250,000. The income tax rate is 40%. Required: Compute Dow's earnings per share for the year ended December 31, 2018.
Explanation / Answer
Common stock Opening bal 630000 SD 25200 sold 54000 retire -2000 O/s as on dec 31 18 707200 Net Income 2250000 EPS (in $) 3.18
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