Question

On January 1, 2021, Cheyenne Corp. had 461,000 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 124,000 shares Issued a 10% stock dividend Acquired 104,000 shares of treasury stock Issued a 3-for-1 stock split Reissued 61,000 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 Cheyenne Corp. earned net income of $3,325,000 during 2021. In addition, it had 102,000 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 2021, using the weighted average number of shares determined in part (a). (Round answer to 2 decimal places eg. $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, es $2.55) Earnings Per Shares eTextbook 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	461000	1.1	3	1	12	126775
Issued Shares	585000	1.1	3	1	12	160875
Stock Dividend	643500		3	2	12	321750
Reacquired Shares	539500		3	1	12	134875
3-for-1 stock split	1618500			4	12	539500
Reissued shares	1679500			3	12	419875
Total weighted average number of shares outstanding						1703650

Solution b:

Earnings per share = Net income / weighted average number of shares outstanding = $3325000 / 1703650 = $1.95 per share

Solution c:

Preferred dividend = 102000*$100*10% = $1,020,000

Earnings per share = (Net income - Preferred dividend) / weighted average number of shares outstanding

= ($3325000 - $1020000) / 1703650 = $1.35 per share

Solution d:

Net Income	$33,25,000
Add: Loss from Discontinued Operations	$4,40,000
Income from continued operations	$37,65,000

Income Statement
For the Year ended Dec 31, 2021
Income from continued operations ($3765000/1703650)	$2.21
Loss from Discontinued Operations ($413000/ 1703650)	-$0.26
Net Income ($3296000/1703650)	$1.95