Computing Earnings per Share

The income statement, statement of retained earnings, and balance sheet for Jeanette Company are as follows:

Jeanette Company Income Statement For the Year Ended December 31, 20X2
	Amount		Percent
Net sales	$8,281,989		100.0%
Less: Cost of goods sold	(5,383,293)		65.0
Gross margin	$2,898,696		35.0
Less: Operating expenses	(1,323,368)		16.0
Operating income	$1,575,328		19.0
Less: Interest expense	(50,000)		0.6
Income before taxes	$1,525,328		18.4
Less: Income taxes (40%)*	(610,131)		7.4
Net income	$915,197		11.0
* Includes both state and federal taxes.

Jeanette Company Statement of Retained Earnings For the Year Ended December 31, 20X2
Balance, beginning of period	$1,979,155
Net income	915,197
Total	$2,894,352
Preferred dividends	(80,000)
Dividends to common stockholders	(201,887)
Balance, end of period	$2,612,465

Jeanette Company Comparative Balance Sheets At December 31, 20X1 and 20X2
	20X1		20X2
Assets
Current assets:
Cash	$2,875,000		$2,580,000
Marketable securities	800,000		700,000
Accounts receivable (net)	939,776		690,000
Inventories	490,000		260,000
Other	93,000		74,261
Total current assets	$5,197,776		$4,304,261
Property and equipment:
Land	$1,575,000		$1,067,315
Building and equipment (net)	1,348,800		1,150,000
Total long-term assets	$2,923,800		$2,217,315
Total assets	$8,121,576		$6,521,576
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable, short term	$1,170,127		$ 543,641
Accounts payable	298,484		101,500
Current maturity of long-term debt	3,000		2,000
Accrued payables	200,000		57,780
Total current liabilities	$1,671,611		$ 704,921
Long-term liabilities:
Bonds payable, 10%	500,000		500,000
Total liabilities	$2,171,611		$1,204,921
Stockholders' equity:
Preferred stock, $25 par, 8%	$1,000,000		$1,000,000
Common stock, $1.30 par	337,500		337,500
Additional paid-in capital*	2,000,000		2,000,000
Retained earnings	2,612,465		1,979,155
Total stockholders' equity	$5,949,965		$5,316,655
Total liabilities and stockholders' equity	$8,121,576		$6,521,576
* For common stock only.

Required:

1.Compute the number of common shares. Round your answer to the nearest dollar. __________ shares

2. Compute earnings per share. Round your answer to the nearest cent. ___________ per share

Calculating the Return on Sales

The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:

Somerville Company Income Statement For the Year Ended December 31, 20X2
	Amount		Percent
Net sales	$8,281,989		100.0%
Less: Cost of goods sold	(5,383,293)		65.0
Gross margin	$2,898,696		35.0
Less: Operating expenses	(1,323,368)		16.0
Operating income	$1,575,328		19.0
Less: Interest expense	(50,000)		0.6
Income before taxes	$1,525,328		18.4
Less: Income taxes (45%)*	(686,398)		8.3
Net income	$838,930		10.1
* Includes both state and federal taxes.

Somerville Company Statement of Retained Earnings For the Year Ended December 31, 20X2
Balance, beginning of period	$1,979,155
Net income	838,930
Total	$2,818,085
Preferred dividends	(80,000)
Dividends to common stockholders	(201,887)
Balance, end of period	$2,536,198

Somerville Company Comparative Balance Sheets At December 31, 20X1 and 20X2
	20X1		20X2
Assets
Current assets:
Cash	$2,875,000		$2,580,000
Marketable securities	800,000		700,000
Accounts receivable (net)	939,776		690,000
Inventories	490,000		260,000
Other	93,000		74,261
Total current assets	$5,197,776		$4,304,261
Property and equipment:
Land	$1,575,000		$1,067,315
Building and equipment (net)	1,348,800		1,150,000
Total long-term assets	$2,923,800		$2,217,315
Total assets	$8,121,576		$6,521,576
Liabilities and stockholders' equity
Current liabilities:
Notes payable, short term	$1,170,127		$ 543,641
Accounts payable	374,751		101,500
Current maturity of long-term debt	3,000		2,000
Accrued payables	200,000		57,780
Total current liabilities	$1,747,878		$ 704,921
Long-term liabilities:
Bonds payable, 10%	500,000		500,000
Total liabilities	$2,247,878		$1,204,921
Stockholders' equity:
Preferred stock, $25 par, 8%	$1,000,000		$1,000,000
Common stock, $1.50 par	337,500		337,500
Additional paid-in capital*	2,000,000		2,000,000
Retained earnings	2,536,198		1,979,155
Total stockholders' equity	$5,873,698		$5,316,655
Total liabilities and stockholders' equity	$8,121,576		$6,521,576
* For common stock only.

Required:

Calculate the return on sales. Round the answer to one decimal place. ________________%