M HW 7: Share based comp \\ C| ezto.mheducation.com/hm.tpx : Apps Syracuse Unive

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M HW 7: Share based comp C| ezto.mheducation.com/hm.tpx : Apps Syracuse University University of Michiga university of North C University ofTexas l Lockheed App M McGraw-Hill Connect My Binghamton 1 Handshake Indeed Question 9 lof 9) Save & Exit || Submit | 15.00 points Problem 19-11 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend [LO19-4, 19-5,19-6, 19-7] On December 31, 2015, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and S75,000 to common and preferred shareholders, respectively, on December 15, 2016 On February 28, 2016, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dows net income for the year ended December 31, 2016, was $2,100,000 The income tax rate is 40% Required: Compute Dow's earmings per share for the year ended December 31, 2016. (Do not round intermediate calculations. Enter your answers in thousands.) umerator s per References eBook & Resources Worksheet Problem 19-11 EPS, nonconvertible preferred stock, treasury shares, shares sold, stock dividend [L019-4, 19-5, 19-6, 19-T

Explanation / Answer

CALCULATION OF NUMBER OF SHARES OUTSTANDING   IN 2016 Year 2016 January 01 2016 Opening shares           6,00,000.00 Shares Add: 'May , 15 Stock Dividend Declared 4% =              24,000.00 Shares Add: Feb 28, 2016 issue of common shares              60,000.00 Shares Less: Shares retured as on July 01                 -2,000.00 Shares Totak Shares outstanding           6,82,000.00 Shares CACLULATION OF NET INCOME AVAILABLE FOR COMMON STOCK HOLDERS Net Income = $          21,00,000 Less : Taxation @ 40%= $            8,40,000 Net income after Taxes   $          12,60,000 CALCULATION OF EARNING PER SHARES FOR THE YEAR 2016 Year 2016 Net Income = $          12,60,000 Divide By   "/" Number of shares outstanding =                 6,82,000 Earning per shares = $                     1.85

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