The Common Stock account for Baltimore Corporation on January 1, 2018 was $67,500

Accounting Oct 12, 2020

The Common Stock account for Baltimore Corporation on January 1, 2018 was $67,500. On July 1, 2018 Baltimore issued an additional 10,000 shares of common stock. The Common Stock is $5 par. There was neither Preferred Stock nor any Treasury Stock. Paid in Capital Excess to par Common Stock was $20,000 on January 1 and $40,000 on July 2 and net income was $127,500. Use this information to determine for December 31, 2018 the amount of Earnings per Share (rounded to the nearest cent).

Expert Solution

Computation of December 31, 2018 the Amount of Earnings per Share:

Earnings per share = Net Income Available for Common Stock Holders / Average Common Stock

Here,

Average common shares = $67,500/$5 + (10,000 * 6/12)

= 13,500+5,000

= 18,500

Earnings Per Share = $127,500 / 18,500 = $6.89 per share

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