Question

DEF Company incorporated on January 1, 2018 after receiving authorization to issue 5,000 shares of $100 par value preferred stock and 500,000 shares of $10 par value common, with the former having a 10% cumulative dividend feature. During fiscal 2018, the company engaged in the following equity transactions: January 1 Issued 500 shares of preferred stock for $120 each. January 1 Issued 10,000 shares of common stock for $25 each. June 30 Bought 1,000 shares of common stock for the treasury at $30 each. December 31 Declared the preferred stock dividend and a $1.00 per-share dividend on the common. DEF’s fiscal 2018 comprehensive income consisted of the following: sales revenue of $2,500,000, cost of goods sold of $1,600,000, operating expenses of $300,000, income taxes of $215,000, and $40,000 of other comprehensive income from a transaction not subject to income tax.

What is the basic and dilutive EPS?

Answer 1

Total Income after Income Taxes	$385000
Other Comphrensive Income	$40000
Total Income	$425000
Less: Dividends on preferred Stock	$500
Net income available for distribution	$424500
Weighted Average share (Note)	10000 Nos
Basic EPS	$42.45
DEPS	$42.45

Note 1

Equity Stock	Weight	No. oF Shares	Weighted Average Share	Remarks
Preferred Stock	1	500	500	Issued at Beginning
Common Stock	1	10000	10000	Issued at Beginning
Buy back of Share on June 30	0.5	1000	-500	Bought Back At mid of year
Weighted Average			10000

Note 2:As there is no convertible debt, convertible preferred shares, share warrants, share options, share rights, employee stock purchase plans ,contractual rights to purchase shares, contingent issuance contracts or agreements so DEPS shall remains the same.