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Party, Inc. has no preferred stock outstanding. The company had 40,000 shares of common stock outstanding...

Party, Inc. has no preferred stock outstanding. The company had 40,000 shares of common stock outstanding on January 1, 2019 and issued 12,000 additional shares on May 1.

If Party’s net income was $200,000, the company should report earnings per share of (to the nearest cent):

Select one:

A. $4.17

B. $3.85

C. $5.24

D. $4.44

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Answer #1

Answer : B. $3.85

Earnings per share = ( Net income / No of shares outstanding)

= $200,000/ 52,000

= $3.85

No of shares outstanding = 40,000+ 12,000= 52,000

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