What does earnings per share report, and how is it calculated?
Earnings per share represent the profit earned by the company on per outstanding share basis calculated on quarterly or yearly intervals.
Earnings per share = (Net income - preferred dividends) / weighted average of common shares outstanding
Earnings Per Shares is a financial ratio, which divides net earnings available to common stockholders by the weighted average outstanding shares over a specific period of time.
Earnings per share represents the amount of net income or loss for each share of the corporation's outstanding common stock. It is calculated by considering net income reduce preferred dividends divide the value by the weighted average number of common shares outstanding.
Journalizing stock issuance and cash dividends and preparing the stockholders’ equity section of the balance sheet
C-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes C-Mobile to issue 120,000 shares of 9%, $150 par value cumulative preferred stock, and 140,000 shares of $3 par value common stock. During the first month, C-Mobile completed the following transactions:
Oct. 2 Issued 18,000 shares of common stock for a building with a market value of $260,000.
6 Issued 650 shares of preferred stock for $160 per share.
9 Issued 14,000 shares of common stock for cash of $84,000.
10 Declared a $13,000 cash dividend for stockholders of record on Oct. 20. Use a separate Dividends Payable account for preferred and common stock.
25 Paid the cash dividend.
1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of C-Mobile’s balance sheet at October 31, 2018. Assume C-Mobile’s net income for the month was $95,000.
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