This always nags me... I would prefer a logical as well as a grammatical explanation of it.
We enjoyed each other's company. We enjoyed each others' company.
Which one is correct? Why is the other not?
Let's take first the sentence
This could be paraphrased as
On the other hand, the sentence
uses the plural form of 'other'. But a paraphrase like
P.S. The question has already been answered at SE English Language and Usage: Should “each” be followed by a singular or plural possessive?
This question is more readily answered by turning the sentence around to use "..of.." in place of the apostrophe. So in this case - "We enjoyed the company of each other". Clearly "..other.." is a singular word which translates to "..other's.." in the possessive form. Take another example - "The dog ate the cats food" - where does the apostrophe go? Turn this around to "The dog ate the food of the cat", or is it "The dog ate the food of the cats"? It is obvious then where the apostrophe goes. QED