Assume the following facts for the current year:
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Net income
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$200,000
|
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Common dividends
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$20,000
|
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Preferred dividends (The preferred stock is not convertible.)
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$10,000
|
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Common shares outstanding on January 1
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20,000 shares
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Common stock issued on July 1 2-for-1 stock split on December 31
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5,000 shares
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Required
a. Compute the earnings per share for the current year.
b. Earnings per share in the prior year was $8.00. Use the earnings per share computed in (a) and present a two-year earnings per share comparison for the current year and the prior year.