On December 30, 2015, Ella Thornes Inc has 2,000 8% preference stocks issued w/ USD200 par value and 200,000 common stocks. During the year, Ella Thorne Inc bought 12,000 of its own common stocks. The company’s net income for 2015 is USD425,000. During the year, there has been no change in the number of common stocks issued. Determine 1) the basic Earnings per Share if the preference stocks are cumulative and the dividend was declared and 2) the basic Earnings per Share if the preference stocks are not cumulative and the dividend was not declared? Show complete solution and explanation.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On December 30, 2015, Ella Thornes Inc has 2,000 8% preference stocks issued w/ USD200 par value and 200,000 common stocks. During the year, Ella Thorne Inc bought 12,000 of its own common stocks. The company’s net income for 2015 is USD425,000. During the year, there has been no change in the number of common stocks issued.

Determine 1) the basic Earnings per Share if the preference stocks are cumulative and the dividend was declared and 2) the basic Earnings per Share if the preference stocks are not cumulative and the dividend was not declared? Show complete solution and explanation.

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