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Chapter 16: Q9BE. (page 875)

Kalin Corporation had 2017 net income of \(1,000,000. During 2017, Kalin paid a dividend of \)2 per share on 100,000 shares of preferred stock. During 2017, Kalin had outstanding 250,000 shares of common stock.Compute Kalin鈥檚 2017 earnings per share.

Short Answer

Expert verified

The earnings per share of Kalin for 2017 is $3.20 per share.

Step by step solution

01

Step 1:

Net income: $1,000,000

Dividend $2 per share on 100,000 shares of preferred stock

Outstanding shares of common stock: 250,000

02

Step 2:

EarningPerShare=NetIncome-PreferredDividendsEnd-of-PeriodCommonSharesOutstanding=$1,000,000-100,000脳$2250,000=$3.20

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Most popular questions from this chapter

E16-29 (L06) (Stock-Appreciation Rights) On December 31, 2013, Beckford Company issues 150,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of \(10. The fair value of the SARs is estimated to be \)4 per SAR on December 31, 2014; \(1 on December 31, 2015; \)10 on December 31, 2016; and $9 on December 31, 2017. The service period is 4 years, and the exercise period is 7 years.

Instructions

(a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stockappreciation rights plan.

(b) Prepare the entry at December 31, 2017, to record compensation expense, if any, in 2017.

(c) Prepare the entry on December 31, 2017, assuming that all 150,000 SARs are exercised.

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