The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year. a. Compute the

Question:

The net income of Foster Furniture, Inc., amounted to $1,920,000 for the current year.

a. Compute the amount of earnings per share assuming that the shares of capital stock outstanding throughout the year consisted of:

1. 400,000 shares of $1 par value common stock and no preferred stock.

2. 100,000 shares of 8 percent, $100 par value preferred stock and 300,000 shares of $5 par value common stock.

b. Is the earnings per share figure computed in part a(2) considered to be basic or diluted? Explain.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...