Question

On January 1, 2017, Chang Corp. had 480,000 shares of common stock outstanding. During 2017, it had the following transactions that affected the Common Stock account

1-Feb		Issued 132,000 shares
1-Mar		Issued a 20% stock dividend
1-May		Acquired 116,000 shares of treasury stock
1-Jun		Issued a 3-for-1 stock split
1-Oct		Reissued 67,000 shares of treasury stock

Determine the weighted-average number of shares outstanding as of December 31, 2017.

Then calculate earnings per share with Net Income of $3,256,000 and $900,000 dividend given to Preferred stock owners.

Answer 1

Weighted shares 3.00 Computation of Weighted average number of shares outstanding! Stock No of Dates Shares Stock splitt dividend Event months Outstanding Outstanding Restatement Restatement outstanding Beginning balance Jan 1 - Feb 1 480,000 1.20 1/12 Issued shares Feb 1 - March 1 612,000 1.20 3.00 1/12 Stock dividend March 1 - May 1 734,400 3.00 2/12 Reaquired shares May 1 - June 1 618,400 3.00 1/12 Stock split June 1 - Oct 1 1,855,200 4/12 Reissued shares Oct 1 - Dec 31 1,922,200 Weighted average number of shares outstanding 144,000 183,600 367,200 154,600 618,400 480,550 1,948,350 3/12 Earnings per share = ( Net Income - Preferrence dividend)/Weighted average number of shares outstanding Earnings per share = (3256000-900000)/1948350 Earnings per share = $ 1.2092 Earnings per share = $ 1.21