Assume the following facts for the current year:
Net income ........................$200,000
Common dividends .....................$ 20,000
Preferred dividends (The preferred stock is not convertible.) ....$ 10,000
Common shares outstanding on January 1 ..........20,000 shares
Common stock issued on July 1 ................5,000 shares
2-for-1 stock split on December 31
Required
a. Compute the earnings per share for the current year.
b. Earnings per share in the prior year was $8.00. Use the earnings per share computed in (a) and present a two-year earnings per share comparison for the current year and the prior year.