Cavendish Ltd Has 2,000,000 Ordinary Shares on Issue at the Beginning

question 32

Multiple Choice

Cavendish Ltd has 2,000,000 ordinary shares on issue at the beginning of the year,1 July 2006.These shares were issued at $2.00 each and at the end of the period have a current market value of $4.50.On 1 August 2006,Cavendish Ltd bought back 300,000 ordinary shares originally issued at $2.50 for $3.00 each.On 1 November 2006,800,000 shares were issued fully paid up at the current market value of these shares.On 1 March 2007,300,000 partly paid-up ordinary shares were issued at an issue price of $3.50.These shares were partly paid to $2.00.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price. For the year ended 30 June 2007,the net income after tax was $1,050,000.
What are the basic earnings per share for Cavendish Ltd for the year ended 30 June 2007?

• A) $0.24
• B) $0.45
• C) $0.46
• D) $0.49
• E) None of the given answers.