Question : 61.Platinum Company reports net income of $520,000 for 2015 and : 1237489

 

 

61.Platinum Company reports net income of $520,000 for 2015 and declared a cash dividend of $1 per share on each of its 100,000 shares of common stock outstanding. What are earnings per share for 2015?   

A. $5.20 per share.

 

B. $1.00 per share.

 

C. $1.20 per share.

 

D. $4.80 per share.

$520,000/100,000 = $5.20

 

 

 

62.Designs, Inc. had 4,000 shares of $7, $100 par preferred stock and 50,000 shares of common stock outstanding throughout 2015. During 2015, Designs declared a dividend of $7 per share on its common stock. Compute earnings per share for 2015 if Designs’ income statement showed net income of $630,000.   

A. $7.00 per share.

 

B. $6.00 per share.

 

C. $12.04 per share.

 

D. $12.60 per share.

($630,000 – (4,000 × $7))/50,000 = $12.04

 

 

 

63.Unique Corp. had 50,000 shares of $5 preferred stock, $100 par, and 100,000 shares of $1 par common stock outstanding throughout the year. Net income for the year was $780,000, and Unique declared and distributed a cash dividend of $1 per share on its common stock. Earnings per share amounted to:   

A. $7.80.

 

B. $1.00.

 

C. $5.30.

 

D. $2.30.

$780,000 – ($5 × 50,000) = $530,000/100,000 = $5.30

 

 

 

64.A company had 240,000 shares of common stock outstanding on January 1 and then sold 60,000 additional shares on April 30. Net income for the year was $426,750. What are earnings per share?   

A. $1.42.

 

B. $1.52.

 

C. $1.78.

 

D. $7.11.

(240,000 × 4/12) + (300,000 × 8/12) = 280,000; $426,750/280,000 = $1.52

 

 

 

65.National Corporation was organized on January 1 and issued 600,000 shares of common stock on that date. On July 1, an additional 200,000 shares were issued for cash. Net income for the year was $3,675,000. Net earnings per share amounted to:   

A. $5.25.

 

B. $6.13.

 

C. $4.59.

 

D. $9.19.

(600,000 × 6/12) + (800,000 × 6/12) = 700,000; $3,675,000/700,000 = $5.25

 

 

 

66.On January 1, 2015, Carleton Corporation had 55,000 shares of $6 par value common stock outstanding. On March 31, 2015, Carleton issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of earnings per share for the year 2015?   

A. 55,000.

 

B. 65,000.

 

C. 62,500.

 

D. 62,000.

(55,000 × 3/12) + (65,000 × 9/12) = 62,500

 

 

 

67.On January 1, 2015, Ole Corporation had 75,000 shares of $8 par value common stock outstanding. On July 31, 2015, Ole issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of earnings per share for the year 2015?   

A. 75,000.

 

B. 80,000.

 

C. 79,167.

 

D. 85,000.

(75,000 × 7/12) + (85,000 × 5/12) = 79,167

 

 

 

68.It would be reasonable to assume that:   

A. Basic earnings per share should exceed diluted earnings per share.

 

B. Diluted earnings per share should exceed basic earnings per share.

 

C. Basic earnings per share should be equal to diluted earnings per share.

 

D. Basic earnings per share would not be presented with diluted earnings per share.

 

 

 

 

69.Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if:   

A. Loss contingencies turn out adversely.

 

B. Convertible securities are converted into shares of common stock.

 

C. Extraordinary losses were to recur.

 

D. Consideration was given to the loss from operations discontinued during the current period.

 

 

 

 

70.When a company reports both diluted earnings per share and basic earnings per share:   

A. Basic EPS would be greater than fully diluted EPS.

 

B. Basic EPS would be less than fully diluted EPS.

 

C. Basic EPS may be either greater or less than fully diluted EPS.

 

D. Both should never be shown – only one or the other would be reported.