Question

For the year ended December 31, 2017 Savory Inc. (Savory) reported net income of $750,000. On December 31, 2016, Savory had the following capital stock outstanding:
Preferred shares, no par, $5 annual dividend, cumulative, authorized 50,000 shares and 50,000 shares outstanding $ 750,000 Common shares, no par, authorized 800,000 shares; issued and 400,000 shares outstanding 3,000,000
On May 31, 2017, Savory issued 40,000 common shares for $480,000 and on September 30, 2017 it issued 50,000 common shares for $750,000. On September 30, 2017, Savory declared and paid the dividend on the preferred shares. No common share dividends were paid in the year.

Required:
a. Calculate Savory's basic earnings per share for the year ended December 31, 2017.
b. How much of a dividend should Savory's shareholders expect to receive in 2018?



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  • CreatedFebruary 26, 2015
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