The 2006 annual report of Software City, Inc., included the following comparative summary of earnings per share over the last three years:

In 2007, Software City, Inc., declared and distributed a 100 percent stock dividend. Following this stock dividend, the company reported earnings per share of \(\$ 1.88\) for 2007.

a. Prepare a three-year schedule similar to the one above, but compare earnings per share during the years 2007, 2006, and 2005. (All per-share amounts in your schedule should be based on the number of shares outstanding after the stock dividend.)

b. In preparing your schedule, which figure (or figures) did you have to restate? Why? Explain the logic behind your computation.

Transcribed Image Text:

Earnings per share 2006 2005 2004 $3.15 $2.40 $1.64