Question

On January 1, 2021, Culver Corp. had 459,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account. February 1 March 1 May 1 June 1 October 1 Issued 126,000 shares Issued a 10% stock dividend Acquired 101,000 shares of treasury stock Issued a 3-for-1 stock split Reissued 62,000 shares of treasury stock Determine the weighted average number of shares outstanding as of December 31, 2021. The weighted average number of shares outstanding e Textbook and Media Assume that Culver Corp. earned net income of $3,383,000 during 2021. In addition, it had 96,000 shares of 10%, $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 $ e Textbook and Media 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 $ e Textbook and Media

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	459000	1.1	3	1	12	126225
Issued Shares	585000	1.1	3	1	12	160875
Stock Dividend	643500		3	2	12	321750
Reacquired Shares	542500		3	1	12	135625
3-for-1 stock split	1627500			4	12	542500
Reissued shares	1689500			3	12	422375
Total weighted average number of shares outstanding						1709350

Solution b:

Earnings per share = Net income / weighted average number of shares outstanding = $3383000/ 1709350 = $1.98

Solution c:

Preferred Dividend = 96000*$100*10% = $960,000

Earnings per share = (Net income - Preferred dividend) / weighted average number of shares outstanding = ($3383000 - $960000) / 1709350 = $1.42

Solution d:

Net Income	$33,83,000
Add: Loss from Discontinued Operations	$4,34,000
Income from continued operations	$38,17,000

Income Statement
For the Year ended Dec 31, 2021
Income from continued operations ($3817000/1709350)	$2.23
Loss from Discontinued Operations ($434000/ 1709350)	-$0.25
Net Income ($3383000/1709350)	$1.98