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Stock dividend = 10%(459000+126000)
= 58500 shares
Multiply each shares outstanding with 3 due to stock split
DATES | EVENT | SHARES OUTSTANDING (A) | STOCK SPLIT RESTATEMENT (B) | STOCK DIVIDEND RESTATEMENT (C) | SHARES OUTSTANDING (A*B*C) |
Jan-01 | BEGINNING BALANCE | 459000 | 3 | 1.1 | 1514700 |
Feb-01 | ISSUED | 585000 | 3 | 1.1 | 1930500 |
Mar-01 | STOCK DIVIDEND | 643500 | 3 | 1 | 1930500 |
May-01 | TREASURY STOCK | 542500 | 3 | 1 | 1627500 |
Jun-01 | stock split 542500*3 | 1627500 | 1 | 1 | 1627500 |
Oct-01 | TREASURY STOCK REISSUED | 1689500 | 1 | 1 | 1689500 |
Restatement = 1+10% = 1.1 should be adjusted for shares outstanding before issue stock dividend
Weighted No of shares outstanding =
1514700*(1/12) + 1930500*(1/12) + 1930500(2/12) + 1627500 *(1/12)+1627500(4/12)+1689500*(3/12)
= 126225+160875+321750+135625+542500+422375
= 1709350
EARNINGS PER SHARE =
Net income / Average outstanding shares
Net income = 3383000
Basic Earnings Per share = 3383000/ 1709350
= 1.979
= 1.98
DIVIDEND on non cumulative preference shares are not considerd because they are not declared by the company
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