Basic Earnings per Share Lyon Company shows the following condensed income state

Question

Basic Earnings per Share

Lyon Company shows the following condensed income statement information for the year ended December 31, 2013:

Lyon declared dividends of $6,000 on preferred stock and $17,280 on common stock. At the beginning of 2013, 10,000 shares of common stock were outstanding. On May 4, 2013, the company issued 2,000 additional common shares, and on October 19, 2013, it issued a 20% stock dividend on its common stock. The preferred stock is not convertible.

Compute the 2013 basic earnings per share. If required, round your answer to the nearest cent.
$

Show the 2013 income statement disclosure of basic earnings per share. If required, round your answers to the nearest cent.

Income before extraordinary items $ per share Extraordinary loss per share Net income $ per share
Income before extraordinary items Less: Extraordinary loss (net of income tax credit) Net income $29,936 (2,176 $27,760

Explanation / Answer

Earnings per share = earnings available for equity share holders / number of share outstanding

                                    = 4480 / 11320

                                   = 0.40

Income before extraordinary items         = 29936

Less- extraordinary Loss                            = (2176)

Net income                                                        27760

Less- Divided paid

-On preferred stock                                        (2000)

-On common stock                                         (17280)

Earnings available for equity shareholders = 4480

Number of share outstanding

beginning = 10000 shares

May4,2013 = 2000 * 241/365 = 1320

Total outstanding = 11320

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