Ahnberg Corporation had 740,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1, Ahnberg issued 360,000 shares of convertible preferred stock. The preferred shares are convertible into 720,000 shares of common stock. During the year Ahnberg paid $216,000 cash dividends on the preferred stock. Net income was $2,806,000.What were Ahnberg's basic and diluted earnings per share for the year?

Diluted EPS1.92

Explanation:

Ahnberg Corporation

1

Net income2,806,000

Less: Preferred Dividends216,000

Net income for Common Stockholders 2,590,000

Divide by Common shares outstanding740,000

Basic EPS3.5

2

Net income2,806,000

Divide by Common shares deemed outstanding1,460,000

(740,000+720,000)

Diluted EPS1.92

Therefore Ahnberg's basic and diluted earnings per share for the year will be 1.92

Basic earnings per share is $3.50 and for the year and diluted earnings per share is $1.92

Explanation:

In order to calculate the basic earnings per share for the year we would have to use the following formula:

Basic EPS=(Net Income - preferred dividends)/Weighted average shares outstanding

Basic EPS=($2,806,000-$216,000)/740,000

Basic EPS=$3.50  per share

Diluted EPS=Total Income-preferred dividends/(outstanding shares+Diluted Shares)

Diluted EPS=$2,806,000/(740,000+720,000)

Diluted EPS=$1.92 per share

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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