Basic Earnings per Share—Simple Capital Structure
The income statement for Fignon Co. for the year ended December 31, 2008, reported the following.
|
Income from continuing operations before income taxes |
$35,000 |
|
Income taxes |
14,000 |
|
Income from continuing operations |
$21,000 |
|
Loss from disposal of segment (net of income taxes) |
(4,200) |
|
Net income |
$16,800 |
Compute basic EPS amounts for 2008 under each of the following assumptions (consider each assumption separately):
(a) The company has only one class of common stock with 20,000 shares outstanding.
(b) The company has shares outstanding as follows: preferred 8% stock, $15 par, cumulative, 5,000 shares; common, $12 par, 20,000 shares. Only the current year’s preferred dividends are unpaid.
(c) Same as (b) except that Fignon Co. also has preferred 7% stock, $10 par, noncumulative, 6,000 shares, and only $3,000 in dividends on the noncumulative preferred has been declared.