Question

On January 1, 2021, Larkspur Corp. had 463,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.

February 1		Issued 118,000 shares
March 1		Issued a 10% stock dividend
May 1		Acquired 103,000 shares of treasury stock
June 1		Issued a 3-for-1 stock split
October 1		Reissued 63,000 shares of treasury stock

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

The weighted-average number of shares outstanding

enter the weighted-average number of shares outstanding as of December 31, 2018

Assume that Larkspur Corp. earned net income of $3,476,000 during 2021. In addition, it had 99,000 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.)

Earnings Per Share

$enter earnings per share rounded to 2 decimal places

Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2021. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings Per Share

$enter earnings per share rounded to 2 decimal places

Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $411,000 (net of tax). Compute earnings per share for 2021. (Round answer to 2 decimal places, e.g. $2.55.)

Larkspur Corp. Income Statement choose the accounting period                                                                      December 31, 2021For the Year Ended December 31, 2021For the Quarter Ended December 31, 2021
select an opening name for this statement                                                                      DividendsExpensesExtraordinary LossExtraordinary GainIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$enter a dollar amount per share rounded to 2 decimal places
select an income statement item                                                                      DividendsExpensesExtraordinary LossExtraordinary GainIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		enter a dollar amount per share rounded to 2 decimal places
select a closing name for this statement                                                                      DividendsExpensesExtraordinary LossExtraordinary GainIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		enter a total earnings per share amount rounded to 2 decimal place

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	463000	1.1	3	1	12	127325
Issued Shares	581000	1.1	3	1	12	159775
Stock Dividend	639100		3	2	12	319550
Reacquired Shares	536100		3	1	12	134025
3-for-1 stock split	1608300			4	12	536100
Reissued shares	1671300			3	12	417825
Total weighted average number of shares outstanding						1694600

Solution b:

Earnings per share = Net income / weighted average number of shares outstanding = $3476000/ 1694600 = $2.05

Solution c:

Preferred Dividend = 99000*$100*9% = $891,000

Earnings per share = (Net income - Preferred dividend) / weighted average number of shares outstanding = ($3476000- $891000)/ 1694600 = $1.53

Solution d:

Net Income	$34,76,000
Add: Loss from Discontinued Operations	$4,11,000
Income from continued operations	$38,87,000

Sheridan Corp.
Income Statement
For the Year ended Dec 31, 2018
Income from continued operations ($3887000/1694600)	$2.29
Loss from Discontinued Operations ($411000/ 1694600)	-$0.24
Net Income ($3476000/1694600)	$2.05