Basic Earnings Per Share Burke Company shows the following condensed income statement information for the year ended December 31, 2007:
|
Income before extraordinary items |
$29,936 |
|
Less: Extraordinary loss (net of income tax credit) |
2,176 |
|
Net income |
$27,760 |
The company declared dividends of $6,000 on preferred stock and $17,280 on common stock. At the beginning of 2007, 10,000 shares of common stock were outstanding. On May 4, 2007 the company issued 2,000 additional common shares,
and on October 19, 2007 it issued a 20% stock dividend on its common stock. The preferred stock is not convertible.
Required
1. Compute the 2007 basic earnings per share.
2. Show the 2007 income statement disclosure of basic earnings per share.
3. Draft a related note to accompany the 2007 financial statements.