Computing EPS: Simple Capital Structure

At the end of 2020, the records of Block Corporation reflected the following.

Common stock, $5 par, authorized 1,500,000 shares
Outstanding January 1, 2020, 1,200,000 shares		$6,000,000
Sold and issued April 1, 2020, 6,000 shares		30,000
Issued 5% stock dividend, September 30, 2020; 60,300 shares		301,500
Preferred stock, 6%, $10 par, nonconvertible, noncumulative, authorized 150,000 shares
Outstanding during year, 60,000 shares		600,000
Paid-in capital in excess of par, common stock		540,000
Paid-in capital in excess of par, preferred stock		300,000
Retained earnings (after the effects of current preferred dividends declared during 2020)		1,920,000
Bonds payable, 6.5%, nonconvertible, issued at par January 1, 2020		3,000,000
Net income		1,476,000
Income tax rate, 25%

a. What EPS presentation is requiredbasic, diluted, or both?

AnswerBasic EPSDiluted EPSBasic and Diluted EPS

b. Compute the required EPS amount(s).

• Note: Round earnings per share amount to two decimal places.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
AnswerBasic EPSDiluted EPSBasic and Diluted EPS	Answer	Answer	Answer

c. Compute the required EPS amount(s), assuming that the preferred stock is cumulative.

• Note: Round earnings per share amount to two decimal places.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
AnswerBasic EPSDiluted EPSBasic and Diluted EPS	Answer	Answer	Answer

Feedback

You have correctly selected 3.