Earnings per share, Cost Accounting

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Daisy Ltd has a net profit after tax of $3 400 000 for the year ending 30 June 2012.  For the entire financial year Daisy Ltd had two million $1.00 cumulative preference shares on issue which provide dividends at a rate of 10% per year.  The preference share dividends were not treated as part of interest expense.

At 1 July 2011 Daisy Ltd had 1 800 000 fully paid up shares on issue.  On 1 October 2011 a further 200 000 fully paid ordinary shares were issued at an issue price of $5 per share.  On 1 May 2012 Daisy Ltd made a 1 for 4 bonus issue of ordinary shares.  The last sale price of an ordinary share before the bonus issue was $5.50.  The basic earnings per share for the year ending 30 June 2011 was $2 per share.

Required

(i) Calculate the earnings per share for the year ending 30 June 2012.  Round number of shares to the nearest whole number and show all calculations.

(ii) What is the comparative earnings per share for the previous year to be reported in the 2012 financial reports?  Show workings.

(iii)  Explain briefly how your answer to this question would differ had there been a rights issue as opposed to a bonus issue of shares.


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