Acc644 Module 8 Class Handout -My Work

This study source was downloaded by 100000865965430 from CourseHero.com on 07-15-2023 04:07:28 GMT -05:00https://www.coursehero.com/file/60567557/ACC644-Module-8-Class-handout-my-work-docx/ Goldey-Beacom CollegeACC644 Financial Reporting and Analysis Spring 2020 Module 8: Stock Transactions, Dividends, and EPS E8-30 Calculating and Interpreting EPS Information Wells Fargo reports the following information in its 2019 form 10K2019 2018Wells Fargo net income 22,894 23,057Preferred stock dividends 1,424 1,236Common stock dividends 7,400 6,908Basic average common shares outstanding 5,136.5 5,237.2Diluted average common shares outstanding 5,209.8 5,324.4a. Determine Wells Fargos basic EPS for both fiscal years. 2019 2018Wells Fargo net income 22 ,894 23 ,057 Less Preferred stock dividends (1 ,424) (1 ,236) Income available to common shareholders 21 ,470 21 ,821 Average common shares outstanding 5,136.5 5,237.2 Earnings per common share (in dollars per share) $ 4.18 $ 4.17 b. Compare the number of common shares outstanding used for the 2019 Basic and Diluted EPS ratios. Provide reasons that explain why the two numbers differ. There is a difference of 73.3 million shares between the number of basic and dilutedcommon shares outstanding. The difference could be attributable to one or more of the following:1. Convertible preferred stock. We see that Wells Fargo paid preferred dividends during the year and perhaps some of this preferred