On December 31, 2015, Berclair Inc. had 260 million shares of common stock and 6

Question

On December 31, 2015, Berclair Inc. had 260 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2016, Berclair purchased 42 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2016. Seven million treasury shares were sold on October 1. Net income for the year ended December 31, 2016, was $300 million. Required: 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

EPS = Total Earnings/Outstanding Shares

Total Earnings = Net Income - Preferred Dividends - Common stock dividend

= $300-54-10.9

= $235.10

Number of outstanding shares = 260-42 = 218

EPS = 235.1/218 = 1.08

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