For the year ended December 31, 2018, Norstar Industries
reported net income of $925,000. At January 1, 2018, the company
had 800,000 common shares outstanding. The following changes in the
number of shares occurred during 2018:
Apr. | 30 | Sold 45,000 shares in a public offering. | ||
May | 24 | Declared and distributed a 5% stock dividend. | ||
June | 1 | Issued 42,000 shares as part of the consideration for the purchase of assets from a subsidiary. |
Required:
Compute Norstar's earnings per share for the year ended December 31, 2018
Weighted average outstanding common share = 800000 + 45000*8/12 + (800000 + 45000*8/12)*5% + 42000*7/12
= 896000 shares
Earnings per share = Net income / Weighted average outstanding common share
= $925000 / 896000
= $1.03 per share
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