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Calculate the earnings per share

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Reference no: EM132913103

Question - Marea's Bike Shop sells luxury, electric bikes. As of January 1, 2021, Marea's has the following capital structure:

Preferred Shares, 7.5%, cumulative, $100 par, 25,000 issued

Each Preferred Share can be converted in two common shares. 2,500,000

Common Shares, 250,000 issued 9,500,000

Additionally, Marea's has 10,000 stock options outstanding. Each stock option can be converted into one common share for $30.

During the year, Marea's has the following transactions that affected its common share account:

Feb 1 Issued 100,000 shares, current market price was $42. Jun 1 Declared and Issued a 25% stock dividend, current market price was $45.

Oct 1 Acquired and retired 100,000 for $40 per stock. Marea's Net Income for 2020 was $1,635,000. Assume that Marea's tax rate is 18%. For simplicity, ignore the requirement to record the debt and equity components separately for a complex financial instrument. For 2021, the average market price for a common share was $40.

Required - Calculate the earnings per share for 2021 as it should be reported to shareholders. Round to the nearest cent.

Reference no: EM132913103

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