Question

 Exercise 16-16

 On January 1, 2021, Wilke Corp. had 480,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.

 February 1 Issued 120,000 shares

 March 1 Issued a 10% stock dividend

 May 1 Acquired 100,000 shares of treasury stock

 June 1 Issued a 3-for-1 stock split

 October 1 Reissued 60,000 shares of treasury stock

 Determine the weighted-average number of shares outstanding as of December 31, 2021.

 The weighted-average number of shares outstanding

 Assume that Wilke Corp. earned net income of $3,456,000 during 2021. In addition, it had 100,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a). (Round answer to 2 decimal places, e.g. $2.55.)

 Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2021.

 Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $432,000 (net of tax). Compute earnings per share for 2021.

Answer 1

Solution a:

Computation of weighted average outastanding shares
	Number of shares	Stock Dividend Restatement	Stock Split Restatement	No. of months	Total Months	Weighted-average shares
Shares outstanding	480000	1.1	3	1	12	132000
Issued Shares	600000	1.1	3	1	12	165000
Stock Dividend	660000		3	2	12	330000
Reacquired Shares	560000		3	1	12	140000
3-for-1 stock split	1680000			4	12	560000
Reissued shares	1740000			3	12	435000
Total weighted average number of shares outstanding						1762000

Solution b:

Earning per share = Net Income / weighted average number of shares outstanding = $3456000 / 1762000 = $1.96 per share

Solution c:

Preferred Dividend = 100000*$100*9% = $900,000

Earning per share = (Net Income - Preferred dividend) / weighted average number of shares outstanding = ($3456000- $900000) / 1762000 = $1.45 per share

Solution d:

Net Income	$34,56,000
Add: Loss from Discontinued Operations	$4,32,000
Income from continued operations	$38,88,000

Income Statement
For the Year ended Dec 31, 2021
Income from continued operations ($3888000/1762000)	$2.21
Loss from Discontinued Operations ($432000/ 1762000)	-$0.25
Net Income ($3456000/1762000)	$1.96