Question

please can someone assist with these questions

TOPIC. LUL 52. At December 31, 20x2, XYZ had 40,000 common shares issued and outstanding and 10,000 nonconvertible preferred shares issued and outstanding. XYZ's net income for the year ended December 31, 20x3, was $120,000. During 20x3. XYZ declared and paid $50,000 cash dividends on common and $8,000 cash dividends on the nonconvertible preferred (the annual requirement). There were no common share or preferred share transactions during the year. The earnings per common share for the year ended December 31, 20x3, should be: A) $1.75 B) $2.40 C) $2.80 D) $3.00 Ans: C Difficulty: Medium Level of Learning: Application Topic: LO2

Answer 1

52.

Earnings per common share

= (Net income - preferred dividends) / Number of common shares outstanding

= ($120,000 - $8,000) / 40,000

= $2.80

Therefore, the correct answer is C.

69.

Calculate weighted average number of shares outstanding as follows:

	A	B	C	D	E	F	G
1	Date	Particulars	No. of Shares Outstanding	Restatement for Stock-split	Number of Months Outstanding	Weight	Weighted-average Number of Shares
2	Jan. 1	Beginning balance	90	2	1	0.083333	15
3	Feb. 1	Shares issued	210	2	2	0.166667	70
4	Apr. 1	Shares issued	270	2	4	0.333333	180
5	Aug. 1	2-for-1 stock split	540		5	0.416667	225
6	Total weighted-average number of shares						490

Therefore, the correct answer is C.

Above figures have been calculated in the following manner:

Date	Particulars	No. of Shares Outstanding	Restatement for Stock-split	Number of Months Outstanding	Weight	Weighted-average Number of Shares
Jan. 1	Beginning balance	90	2	1	=1/12	=C2*D2*F2
Feb. 1	Shares issued	=C2+120	2	2	=2/12	=C3*D3*F3
Apr. 1	Shares issued	=C3+60	2	4	=4/12	=C4*D4*F4
Aug. 1	2-for-1 stock split	=C4*2		5	=5/12	=C5*F5
Total weighted-average number of shares						=SUM(G2:G5)

70.

Calculate weighted average number of shares outstanding as follows:

	A	B	C	D	E	F	G	H
1	Date	Particulars	No. of Shares Outstanding	Restatement for Stock Dividend	Restatement for Stock-split	Number of Months Outstanding	Weight	Weighted-average Number of Shares
2	Jan. 1	Beginning balance	60	1.1	2	3	0.25000	33.00
3	Apr. 1	2-for-1 stock split	120	1.1		4	0.33333	44.00
4	Aug. 1	Stock dividend	132			1	0.08333	11.00
5	Sept. 1	Acquired treasury stock	122			4	0.33333	40.67
6	Total weighted-average number of shares							128.67

Therefore, the correct answer is D.

Above figures have been calculated in the following manner:

Date	Particulars	No. of Shares Outstanding	Restatement for Stock Dividend	Restatement for Stock-split	Number of Months Outstanding	Weight	Weighted-average Number of Shares
Jan. 1	Beginning balance	60	1.1	2	3	=F2/12	=C2*D2*E2*G2
Apr. 1	2-for-1 stock split	=C2*2	1.1		4	=F3/12	=C3*D3*G3
Aug. 1	Stock dividend	=C3*1.1			1	=F4/12	=C4*G4
Sept. 1	Acquired treasury stock	=C4-10			4	=F5/12	=C5*G5
Total weighted-average number of shares							=SUM(H2:H5)