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The net income of Foster Furniture. Inc. amounted to $1,920,000 for the current year. Compute the amount of earnings per share assuming that the shares of capital stock outstanding 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 par value 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. Compute the amount of earnings per share assuming that the shares of capital stock outstanding 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 par value common stock. b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted' Explain.

FINANCIAL ACCOUNTING
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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The net income of Foster Furniture. Inc. amounted to $1,920,000 for the current year. Compute the amount of earnings per share assuming that the shares of capital stock outstanding 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 par value common stock. b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted' Explain.
Transcribed Image Text:The net income of Foster Furniture. Inc. amounted to $1,920,000 for the current year. Compute the amount of earnings per share assuming that the shares of capital stock outstanding 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 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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