6 1.66 points eBook Print References On December 31, 2023, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. • Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and preferred shareholders, respectively, on December 15, 2024. • On February 28, 2024, Dow sold 64,000 common shares. ⚫ In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1. • Dow's net income for the year ended December 31, 2024, was $2,350,000. The income tax rate is 25%. • As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the current and each of the previous two years. • Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted December 31, 2022 December 31, 2023 December 31, 2024 Options Granted (adjusted for the stock dividend) Share Price 12,000 $ 16 7,000 10,500 $ 25 $ 24 The market price of the common stock averaged $24 per share during 2024. Required: Compute Dow's earnings per share for the year ended December 31, 2024. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in thousands (i.e., 10,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. + Denominator Numerator Dow's basic Dow's diluted $ 2,276 + ÷ 735 = $ Earnings per share 3.10 =
6 1.66 points eBook Print References On December 31, 2023, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. • Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and preferred shareholders, respectively, on December 15, 2024. • On February 28, 2024, Dow sold 64,000 common shares. ⚫ In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1. • Dow's net income for the year ended December 31, 2024, was $2,350,000. The income tax rate is 25%. • As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the current and each of the previous two years. • Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted December 31, 2022 December 31, 2023 December 31, 2024 Options Granted (adjusted for the stock dividend) Share Price 12,000 $ 16 7,000 10,500 $ 25 $ 24 The market price of the common stock averaged $24 per share during 2024. Required: Compute Dow's earnings per share for the year ended December 31, 2024. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in thousands (i.e., 10,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. + Denominator Numerator Dow's basic Dow's diluted $ 2,276 + ÷ 735 = $ Earnings per share 3.10 =
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 57E: Outstanding Stock Lars Corporation shows the following information in the stockholders equity...
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On December 31, 2023, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares of 9%, noncumulative,
nonconvertible preferred stock issued and outstanding.
• Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and
preferred shareholders, respectively, on December 15, 2024.
• On February 28, 2024, Dow sold 64,000 common shares.
⚫ In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1.
• Dow's net income for the year ended December 31, 2024, was $2,350,000. The income tax rate is 25%.
• As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the
current and each of the previous two years.
• Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant
and can be exercised one year from that date.
Information concerning the number of options granted and common share prices follows:
Date Granted
December 31, 2022
December 31, 2023
December 31, 2024
Options Granted
(adjusted for the
stock dividend)
Share Price
12,000
$ 16
7,000
10,500
$ 25
$ 24
The market price of the common stock averaged $24 per share during 2024.
Required:
Compute Dow's earnings per share for the year ended December 31, 2024.
Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in thousands (i.e., 10,000 should
be entered as 10). Round "Earnings per share" answer to 2 decimal places.
+ Denominator
Numerator
Dow's basic
Dow's diluted
$
2,276
+
÷
735 =
$
Earnings per share
3.10
=
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