On December 31 2013, Lewis Corporation has 3,000, $4 preferred shares and 100,000 common shares. During the

Question:

On December 31 2013, Lewis Corporation has 3,000, $4 preferred shares and 100,000 common shares.

During the year, the company had the following share transactions:

Jan. 1 Sold 1,000 preferred shares for cash.

Mar. 31 Sold 12,000 common shares for cash.

June 1 Reacquired 14,000 common shares for cash.

Dec. 1 Sold 24,000 common shares for cash.

Lewis's profit in 2014 is $478,000.

Instructions

(a) Calculate the weighted average number of common shares for the year.

(b) Calculate earnings per share under each of the following four independent assumptions:

1. Assume that the preferred shares are cumulative and that the dividend to the preferred shareholders was

(i) Declared, and

(ii) Not declared.

2. Assume that the preferred shares are noncumulative and that the dividend to the preferred shareholders was

(i) Declared, and

(ii) Not declared.

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