Hardaway Fixtures' balance sheet at December 31, 2020, included the following: Shares issued and outstanding:
Common stock, $1 par $1,080,000
Nonconvertible preferred stock, $50 par 25,000

On July 21, 2021, Hardaway issued a 25% stock dividend on its common stock. On December 12, it paid $75,000 cash dividends on the preferred stock. Net income for the year ended December 31, 2021, was $4,800,000.

Required:
Compute Hardaway's earnings per share for the year ended December 31, 2021.

$3.50

Explanation:

Earnings for EPS = $4,800,000 - $75,000

Earnings for EPS = $4,725,000

Weighted Average Outstanding share:

Date             Number of shares             Weight       Weighted Average

01-01-2021   Opening 1,080,000            12/12             1,080,000

21-07-2021  Stock Dividend 270,000    12/12             270,000

                   (1,080,000*25%)

                     Total                                                         1,350,000

Earnings per share = Earnings for EPS/Weighted Average Outstanding share

Earnings per share = $4,725,000/1,350,000

Earnings per share = $3.50

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