Chapter 19, Problem 19.10BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

$\begin{array}{c}\begin{array}{l}\text{Earnings }\\ \text{per share}\end{array}\}\text{ = }\frac{\text{Earnings available to common shareholders}}{\text{Weighted average number of common shares outstanding}}\\ \text{= }\frac{\text{Net income –Preferred dividends}}{\text{Weighted average number of common shares outstanding}}\end{array}$

To explain: The determination of ‘numerator for basic EPS’, while computing for reporting EPS in the income statements

(2)

To determine

To explain: The determination of ‘denominator for basic EPS’, while computing for reporting EPS in the income statements

(3)

To determine

To explain: The determination of ‘numerator for diluted EPS’, while computing for

reporting EPS in the income statements

(4)

To determine

To explain: The determination of ‘denominator for diluted EPS’, while computing for reporting EPS in the income statements