Answer:
Marigold Corp.
2021 Earnings per common share:
Common Stock:
Dec 31, 2020 Balance = 305,000 shares
Jan 30, 2022 Stock dividend = 305,000 shares
Balance on Jan 30 = 610,000 shares
Net Income for 2021 = $1,135,000
6% Cumulative preferred dividend for 2020 & 2021 = $115,200 ($57,600 x2)
2021 Earnings per share = ($1,135,000 - $115,200)/305,000 = $3.34
Explanation:
Earnings per share is the net income dividend by the number of outstanding stock.
As at December 31, 2021, the common stock outstanding equals 305,000 shares.
The preferred stock is cumulative. This means that whether dividend is declared or not in a year, it continues to be accumulated year on year until when the company is able to pay.
Since 2020 dividend for preferred stock was not declared, in 2021 when the common stock dividend was declared, the previous year's and the present would be accumulated and deducted from earnings to arrive at earnings for common stockholders.
Answer:
Marigold's 2021 earnings per common share should be $1.77
Explanation:
Given:
Net income for 2021: $1,135,000
Num. of common stck shares: 305,000
Cumulative preferred stock outstanding: 9600 shares of 6%, $100 par value.
The dividend to be accrued on preference shares=
9,600 * $100 * 6% = $57,600
Share outstanding will be:
305,000 * 2 = 610,000
Earnings available to common share-holders =
(Net income-Preferred dividend) =
$1,135,000 - $57,600 = $1,077,400
Earnings per share is calculated as:
$1,077,400 / 610,000 = $1.77
Therefore, Marigold's 2021 earnings per common share should be $1.77
