Posted: August 28th, 2016

Calculate basic earnings per share of common stock

Calculate basic EPS, and explain the EPS effect of convertible preferred
Thrifty Co. reported net income of $465,000 for its fiscal year ending January 31, 2011. At the beginning of that fiscal year, 200,000 shares of common stock were outstanding. On October 31, 2010, an additional 60,000 shares were issued. No other changes in common shares outstanding occurred during the year. Also during the year the company paid the annual dividend on the 25,000 shares of 7%, $40 par value preferred stock that were also outstanding the entire year.
a) Calculate basic earnings per share of common stock for the year ended January 31, 2011.
b) If Thrifty Co. preferred stock where convertible into common stock, what additional calculation would be required?

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