4) On January 1, 2020, Ehrlich had outstanding 300,000 shares of $2 par value common stock and 15,000 shares of 8%, $50 par value, cumulative preferred stock. Each share of preferred stock is convertible into 4 shares of common stock. During 2020, Ehrlich had the following transactions with regards to its common stock: 3/1 purchased 20,000 shares of its common stock 7/1 Declared a 2-for-1 stock split 9/1 issued 15,000 shares of its common stock During 2020, Ehrlich declared and paid the dividend on its preferred stock . During 2020, Ehrlich earned net income of $750,000. INSTRUCTIONS: Determine the weighted average number of shares outstanding. Determine the corporation’s basic earnings per share. Determine the corporation’s diluted earnings per share.
4) On January 1, 2020, Ehrlich had outstanding 300,000 shares of $2 par value common stock and 15,000 shares of 8%, $50 par value, cumulative preferred stock. Each share of preferred stock is convertible into 4 shares of common stock. During 2020, Ehrlich had the following transactions with regards to its common stock: 3/1 purchased 20,000 shares of its common stock 7/1 Declared a 2-for-1 stock split 9/1 issued 15,000 shares of its common stock During 2020, Ehrlich declared and paid the dividend on its preferred stock . During 2020, Ehrlich earned net income of $750,000. INSTRUCTIONS: Determine the weighted average number of shares outstanding. Determine the corporation’s basic earnings per share. Determine the corporation’s diluted earnings per share.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4) On January 1, 2020, Ehrlich had outstanding 300,000 shares of $2 par value common stock and 15,000 shares of 8%, $50 par value, cumulative preferred stock. Each share of preferred stock is convertible into 4 shares of common stock.
During 2020, Ehrlich had the following transactions with regards to its common stock:
3/1 purchased 20,000 shares of its common stock
7/1 Declared a 2-for-1 stock split
9/1 issued 15,000 shares of its common stock
During 2020, Ehrlich declared and paid the dividend on its preferred stock .
During 2020, Ehrlich earned net income of $750,000.
INSTRUCTIONS:
- Determine the weighted average number of shares outstanding.
- Determine the corporation’s basic earnings per share.
- Determine the corporation’s diluted earnings per share.
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