Question

Exercise 16-16 On January 1, 2018, Sweet Corp. had 479,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock count February 1 Issued 117,000 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 59,000 shares of treasury stock Determine the weighted average number of shares outstanding as of December 31, 2018 The weighted average number of shares outstanding Assume that Sweet Corp, earned net income of $3,408,000 during 2018. In addition, had 102,000 shares of 109, $100 par non convertible, soncumulative med stock outstanding for the entire year. Because of liquidity considerations, however, the company did not dedare and pay a preferred dividend in 2018. Compute camins 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

Answer 1

Sweet Corp. Requirement a Stock Dividend Restatement 1.1 1.1 Stock Split Restatement 3.0 Number /12 of months months Dates Shares Event Outstanding Outstanding Beginning balance Jan 1 - Feb 1 4,79,000 Issued shares Feb 1 - March 1 5,97,000 Stock dividend March 1 - May 1 6,56,700 Reacquired shares May 1 - June 1 5,53,700 Stock split June 1 - Oct 1 16,61,100 Reissued shares Oct 1 - Dec 31 17,20,100 Weighted average number of shares outstanding: BBBBBB Weighted Shares 1,31,725 1,64,175 3,28,350 1,38,425 5,53,700 4,30,025 17,46,400 Requirement b No dilutive securities, so computing Basic EPS: Earnings per share = Net Income - Preferred Dividends Weighted Average Shares 34,08,000 17,46,400 1.95 Requirement No dilutive securities, so computing Basic EPS: 34,08,000 - Earnings per share = Net Income - Preferred Dividends Weighted Average Shares 10,20,000 17,46,400 1.37 Requirement d Net Income Add loss from discontinued operations Income from continuing operations: 34,08,000 4,26,000 38,34,000 $3,834,000/1,746,400 = $426,000/1,746,400 = EPS: Income from continuing operations Loss from discontinued operations Income before extraordinary item Extraordinary gain Net income 2.20 (0.24) 1.95 1.95