At december 31, 2013 and 2014, lapham corp. Had 200,000 shares of common stock and 20,000 shares of $5 dividend, $100 par value cumulative preferred stock outstanding. No dividends were declare on either ghe preferred or common stock in 2013 or 2014. Net income for 2014 was $1,000,000. For 2014, basic earnings per common dhare amounted to
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5.00
To calculate the basic earnings per common share for Lapham Corp. in 2014, we need to divide the net income by the weighted average number of common shares outstanding.
First, let's find the weighted average number of common shares outstanding:
At December 31, 2013, Lapham Corp. had 200,000 shares of common stock outstanding.
At December 31, 2014, Lapham Corp. still had 200,000 shares of common stock outstanding.
Since there were no changes in the number of common shares outstanding during the year, the weighted average number of common shares for 2014 is equal to the number of common shares at the end of the year, which is 200,000.
Next, let's calculate the basic earnings per common share:
Basic Earnings per Common Share = Net Income / Weighted Average Number of Common Shares Outstanding
In this case, the net income for 2014 was $1,000,000 and the weighted average number of common shares outstanding was 200,000.
Basic Earnings per Common Share = $1,000,000 / 200,000 = $5
Therefore, the basic earnings per common share for Lapham Corp. in 2014 amounted to $5.