Calculate the earnings per share on common shares

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Reference no: EM132846727

Question - A portion of the combined statement of income and retained earnings of Crane Ltd. for the current year ended December 31, 2020 follows:

Income before discontinued operations $5,103,000

Loss from discontinued operations, net of applicable income tax (Note 1) 4,047,000

Net income 1,056,000

Retained earnings at beginning of year 23,280,000

24,336,000

Dividends declared: On preferred shares, $7.00 per share $528,500

On common shares, $1.20 per share 1,800,000

2,328,500

Retained earnings at end of year $22,007,500

Note 1. During the year, Crane Inc. suffered a loss from discontinued operations of $4,047,000 after the applicable income tax reduction of $1,011,750.

At the end of 2020, Crane Inc. has outstanding 1.50 million common shares and 75,500 preferred shares.

On April 1, 2020, Crane Inc. issued 1.05 million common shares for $5 per share to help finance the loss.

Required -

1. Calculate the earnings per share on common shares for 2020 as it should be reported to shareholders.

2. Assume that Crane Inc. issued a 18% stock dividend on September 1, 2020. Calculate the earnings per share on common shares for 2020 as it should be reported to shareholders.

Reference no: EM132846727

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