The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year. a. Compute the amount of earnings per share assuming that the shares of capital stock outstand-ing throughout the year consisted of: 1. 400,000 shares of $1 par value common stock and no preferred stock.2. 100,000 shares of 8 percent, $100 par value preferred stock and 300,000 shares of $5 parvalue common stock.b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted? Explain.
The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year. a. Compute the amount of earnings per share assuming that the shares of capital stock outstand-ing throughout the year consisted of: 1. 400,000 shares of $1 par value common stock and no preferred stock.2. 100,000 shares of 8 percent, $100 par value preferred stock and 300,000 shares of $5 parvalue common stock.b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year.
a. Compute the amount of earnings per share assuming that the shares of capital stock outstand-
ing throughout the year consisted of:
1. 400,000 shares of $1 par value common stock and no
2. 100,000 shares of 8 percent, $100 par value preferred stock and 300,000 shares of $5 par
value common stock.
b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted? Explain.
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