Compute earnings per share for the current year

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Reference no: EM132453880

Problem - Presented below is information related to Starr Company.

1. Net Income [including a discontinued operations gain (net of tax) of $69,000] $229,5002.

2. Capital Structure

a. Cumulative 5% preferred stock, $100 par, 6,300 shares issued and outstanding $630,000.

b. $10 par common stock, 74,000 shares outstanding on January 1. On April 1, 40,000 shares were issued for cash. On October 1, 16,000 shares were purchased and retired. $1,000,000.

c. On January 2 of the current year, Starr purchased Oslo Corporation. One of the terms of the purchase was that if Oslo net income for the following year is $237,000 or more, 50,000 additional shares would be issued to Oslo stockholders next year. Oslo's net income for the current year was $2,600,000.

3. Other Information-

a. Average market price per share of common stock during entire year $30.

b. Income tax rate 30%.

Required -

1. Compute weighted average shares outstanding.

2. Compute earnings per share for the current year.

Reference no: EM132453880

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