---**Calculation of Basic Earnings Per Share** **Case Study: Schaefer Co. Fiscal Year Ended January 31, 2023**Schaefer Co. reported a net income of $191,150 for its fiscal year ended January 31, 2023. At the beginning of that fiscal year, 50,000 shares of common stock were outstanding. On October 31, 2022, an additional 15,000 shares were issued. No other changes in common shares outstanding occurred during the year. Also during the year, the company paid the annual dividend on the 20,000 shares of 6%, $50 par value preferred stock that were outstanding the entire year.**Required:**a. **Calculate Basic Earnings Per Share of Common Stock for the Year Ended January 31, 2023**---1. **Determine the Net Income Available to Common Shareholders:** - Net Income: $191,150 - Preferred Dividend: - Dividend Rate: 6% - Par Value: $50 - Number of Preferred Shares: 20,000 - Annual Preferred Dividend: $ 20,000 \times 50 \times 0.06 = $60,000 $ - Net Income Available to Common Shareholders: \[ 191,150 - 60,000 = $131,150 \]2. **Calculate the Weighted Average Number of Common Shares Outstanding:** - Shares Outstanding at Beginning of Year: 50,000 - Additional Shares Issued on October 31, 2022: 15,000 - Weighted Average Calculation: - 50,000 shares $\times$ 9/12 = 37,500 - 65,000 shares (50,000 + 15,000) $\times$ 3/12 = 16,250 - Total Weighted Average Shares: $ 37,500 + 16,250 = 53,750 $3. **Determine Basic Earnings Per Share (EPS):** - EPS Formula: \[ \text{EPS} = \frac{\text{Net Income Available to Common Shareholders}}{\text{Weighted Average Number of Common Shares Outstanding}} \] - EPS Calculation: \[ EPS = \frac{131,150}{53,750}

Number of common shares issued is the common stock.Treasury stock is the shares repurchased.Treasury…

Schaefer Co. reported net income of $191,150 for its fiscal year ended January 31, 2023. At the beginning of that fiscal year, 50,000 shares of common stock were outstanding. On October 31, 2022, an additional 15,000 shares were issued. No other changes in common shares outstanding occurred during the year. Also during the year, the company paid the annual dividend on the 20,000 shares of 6%, $50 par value preferred stock that were outstanding the entire year. Required: a. Calculate basic earnings per share of common stock for the year ended January 31, 2023.

Schaefer Co. reported net income of $191,150 for its fiscal year ended January 31, 2023. At the beginning of that fiscal year, 50,000 shares of common stock were outstanding. On October 31, 2022, an additional 15,000 shares were issued. No other changes in common shares outstanding occurred during the year. Also during the year, the company paid the annual dividend on the 20,000 shares of 6%, $50 par value preferred stock that were outstanding the entire year. Required: a. Calculate basic earnings per share of common stock for the year ended January 31, 2023.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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