Basic Earnings per Share—Simple Capital Structure
Great Northern Inc. reported the following comparative information in the Stockholders’ Equity section of its 2009 balance sheet.
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December 31, |
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2009 |
2008 |
2007 |
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12% preferred stock, $50 par |
$ 82,500 |
$ 67,500 |
$ 50,000 |
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Paid in capital in excess of par—preferred |
13,400 |
9,200 |
5,000 |
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Common stock, $5 par* |
410,600 |
399,600 |
325,000 |
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Paid in capital in excess of par—common |
64,300 |
58,800 |
35,000 |
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Paid in capital from treasury stock |
1,800 |
800 |
800 |
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Retained earnings |
471,200 |
396,460 |
290,200 |
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Total stockholders’ equity |
$1,043,800 |
$932,360 |
$706,000 |
In addition, company records show that the following transactions involving stockholders’ equity were recorded in 2008 and 2009.
2008
May 1 Sold 4,500 shares of common stock for $12, par value $10.
June 30 Sold 350 shares of preferred stock for $62, par value $50.
Aug. 1 Issued an 8% stock dividend on common stock. The market price of the stock was $15.
Sept. 1 Declared cash dividends of 12% on preferred stock and $1.50 on common stock.
Dec. 31 Income before extraordinary items for the year totaled $316,200. In addition, Great Northern had an extraordinary gain of $12,500, net of tax.
2009
Jan. 31 Sold 1,100 shares of common stock for $15.
May 1 Sold 300 shares of preferred stock for $64.
June 1 Issued a 2 for 1 split of common stock, reduced par value to $5.
Sept. 1 Purchased 500 shares of common stock for $9 to be held as treasury stock.
Oct. 1 Declared cash dividends of 12% on preferred stock and $2 per share on outstanding common stock.
Nov. 1 Sold 500 shares of treasury stock for $11.
Dec. 31 Net income for the year included an extraordinary loss, net of income tax, of $19,000.
Instructions: Compute the basic EPS amounts for 2008 and 2009 to be presented in the income statement for 2009.