Mary Poppins Company had 50,000 common shares outstanding at the beginning of 2020

Accounting Nov 26, 2020

Mary Poppins Company had 50,000 common shares outstanding at the beginning of 2020. On April 30, the company sold an additional 10,000 shares and on October 1, the company declared a 2 for 1 stock split. The net income for 2016 was $500,000 and the preferred shareholders received $125,000 of dividends. Mary Poppins Company has a December 31 year end. REQUIRED: Calculate the Earnings per Share for 2020.

Expert Solution

1) Net income = $ 500000

- Prefrence dividend = $ 125000

Net income after dividend i.e. (Earning available for Equity shareholders) $ (500000-125000) = $ 375000

2) Total no. of shares (50000+10000) = 60000

Total no. of shares after splitting up (60000*2)= 120000

3) Earning Per Share = Earning available for Equity shareholders / Total no. of shares

= $ 375000/120000

= $ 3.125

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote