Question

Sweet Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,720,000 shares of $10 par common stock. At no time has Sweet issued any potentially dilutive securities. Listed below is a summary of Sweet’s common stock activities.

1.		Number of common shares issued and outstanding at December 31, 2018		1,910,000
2.		Shares issued as a result of a 10% stock dividend on September 30, 2019		191,000
3.		Shares issued for cash on March 31, 2020		1,830,000
		Number of common shares issued and outstanding at December 31, 2020		3,931,000
4.		A 2-for-1 stock split of Sweet’s common stock took place on March 31, 2021

Compute the weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement.

shares

Compute the weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement.

shares

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement.

shares

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement.

shares

Answer 1

Please find below table useful to compute desired results: -

9720000 1910000 =10%*B4 1830000 =SUM(B4:36) =B4*9/12 =1.1 =B9*B10 =(B4+B5)*3/12 =B11+B12 А 1 Particulars given: 2 Authorized to issue 3 Par value 4 No. of shares issued 5 shares issued as 10% stock dividend 6 Shares issued for cash 7 No. of shares outstanding 8 9 Jan. 1 - Sep 30 10 Retroactive Adjustment for stock dividend 11 Jan. 1 - Sep. 30 adjusted 12 Oct. - Dec. 31 13 Total shares 14 15 Jan. 1 - Mar. 31 16 Apr. 1 - Dec. 31 17 Total Shares 18 19 Weighted Average no. of shares 20 Retroactive adjustment for stock split 21 Shares 22 23 Jan. 1- Mar. 31 24 Retroactive adjustment for stock split 25 Jan. 1- Mar. 31 adjusted 26 Mar. 1 - Dec. 31 27 Total Shares =(B4+B5)*3/12 =B7*9/12 =B15+B16 =B17 =B19*B20 =B7*3/12 =B23*B24 =B7*2*9/12 =B25+B26

End results would be as follows: -

A 9,720,000 10 1,910,000 191,000 | 1.830.000 3,931,000 1,432,500 1.1 1,575,750 525,250 2,101,000 1 Particulars given 2 Authorized to issue 3 Par value 4 No. of shares issued 5 shares issued as 10% stock dividend 6 Shares issued for cash 7 No. of shares outstanding 8 9 Jan. 1 - Sep. 30 10 Retroactive Adjustment for stock dividend 11 Jan. 1 - Sep 30 adjusted 12 Oct. - Dec. 31 13 Total shares 14 15 Jan. 1 - Mar. 31 16 Apr. 1 - Dec. 31 17 Total Shares 18 19 Weighted Average no. of shares 20 Retroactive adjustment for stock split 21 Shares 22 23 Jan. 1- Mar. 31 24 Retroactive adjustment for stock split 25 Jan. 1- Mar. 31 adjusted 26 Mar. 1 - Dec. 31 27 Total Shares 525,250 2,948,250 3,473,500 3,473,500 6,947,000 982,750 1,965,500 5,896,500 7,862,000