Presented below is information related to Starr Company.

1. Net Income [including an extraordinary gain (net of tax) of $70,000] $350,000

2. Capital Structure

a. Cumulative 8% preferred stock, $100 par,

6,000 shares issued and outstanding $600,000

b. $10 par common stock, 74,000 shares outstanding on January 1.

On April 1, 40,000 shares were issued for cash. On October 1,

16,000 shares were purchased and retired. $1,000,000

c. On January 2 of the current year, Starr purchased Oslo Corporation.

One of the terms of the purchase was that if Starr's net income for the

following year is $2,400,000 or more, 50,000 additional shares would

be issued to Oslo stockholders next year.

3. Other Information

a. Average market price per share of common stock during entire year $30

b. Income tax rate 30%

Instructions

Compute earnings per share for the current year.

Problem 7 Presented below is information related to Starr Company. 1. Net Income [including an extraordinary gain (net of tax) of $70,000] $350,000 2. Capital Structure a. Cumulative 8% preferred stock, $100 par, 6,000 shares issued and outstanding $600,000 b. $10 par common stock, 74,000 shares outstanding on January 1. On April 1, 40,000 shares were issued for cash. On October 1, 16,000 shares were purchased and retired. $1,000,000 c. On January 2 of the current year, Starr purchased Oslo Corporation. One of the terms of the purchase was that if Starr's net income for the following year is $2,400,000 or more, 50,000 additional shares would be issued to Oslo stockholders next year. 3. Other Information a. Average market price per share of common stock during entire year b. Income tax rate Instructions Compute earnings per share for the current year. 58 $30 30%