Basic Earnings per Share Lyon Company shows the following condensed income state
ID: 2459056 • Letter: B
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.
Required:
Compute the 2013 basic earnings per share. If required, round your answer to the nearest cent.
$ per share _____
Show the 2013 income statement disclosure of basic earnings per share. If required, round your answers to the nearest cent.
Income before extraordinary items Less: Extraordinary loss (net of income tax credit) Net income $29,936 (2,176 $27,760
Explanation / Answer
Answer:
1) Basic earnings per share = $1.60 per share (21760/13591.23)
2) Income Statement disclosure of Basic EPS:
Income before extraordinary items = $1.76 per share (23936/13591.23)
Extra-ordinary loss = ($0.16) per share (2176/13591.23)
Net Income = $1.60 per share (21760/13591.23)
Calculations:
a) Weighted average no of shares:
1.1.2013 to 5.3.2013 No of shares 12000 - 123 days
5.4.2013 to 12.31.2013 No of shares 14400 - 242 days
Weighted average = 12000*123/365 + 14400*242/365 = 13,591.23 shares