Exercise 19-14 EPS; stock dividend; nonconvertiblepreferred stock; treasury shar

Question

Exercise 19-14 EPS; stock dividend; nonconvertiblepreferred stock; treasury shares; shares sold LO5 LO6LO7

On December 31, 2008, Berclair, Inc. had 200million shares of common stock and 3 million shares of 9%, $100 parvalue cumulative preferred stock issued and outstanding. On March1, 2009, Berclair purchased 24 million shares of its common stockas treasury stock. Berclair issued a 5% common stock dividend onJuly 1, 2009. Four million treasury shares were sold on October 1.Net income for the year ended December 31, 2009, was $150million.

Round your answerto two decimal places. Omit the "$" sign in yourresponse.

Exercise 19-14 EPS; stock dividend; nonconvertiblepreferred stock; treasury shares; shares sold LO5 LO6LO7

On December 31, 2008, Berclair, Inc. had 200million shares of common stock and 3 million shares of 9%, $100 parvalue cumulative preferred stock issued and outstanding. On March1, 2009, Berclair purchased 24 million shares of its common stockas treasury stock. Berclair issued a 5% common stock dividend onJuly 1, 2009. Four million treasury shares were sold on October 1.Net income for the year ended December 31, 2009, was $150million.

Required: Compute Berclair's earnings per share for the yearended December 31, 2009.

Round your answerto two decimal places. Omit the "$" sign in yourresponse.

Explanation / Answer

No. of shares as on December 31,2008                                         200.00 millions Less :    Buy back on March 1,2009                                                -24.00 millions Add :    5% Stock dividendissued  (200 - 24) x5%                            8.80 millions Add :    Treasury stcokissued                                                               4.00millions                                                                                                        -----------------                       Sharesoutstanding as on December 31,2009             188.80millions                                                                                                       ============ Net Income for theyear                                                                   $150.00millions Less: 9% Preferencedividend      (3 millions x $100) x9%                   27.00 millions                                                                                                       ------------------    Net Income available to Common Stockholder                             $123.00millions                                                                                                       =============    Earnings pershare         $123.00millions / 188.80 millionsshares      =   $0.65per share     

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