Question

Culver Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,790,000 shares of $10 par common stock. At no time has Culver issued any potentially dilutive securities. Listed below is a summary of Culver’s common stock activities.

1.		Number of common shares issued and outstanding at December 31, 2018		2,200,000
2.		Shares issued as a result of a 10% stock dividend on September 30, 2019		220,000
3.		Shares issued for cash on March 31, 2020		2,090,000
		Number of common shares issued and outstanding at December 31, 2020		4,510,000
4.		A 2-for-1 stock split of Culver’s common stock took place on March 31, 2021

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

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

3. 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.

4. 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.

Answer 1

	Dates	Shares	Fraction	Weighted
Shares Outstanding	Jan 1 2019	2,200,000	0.75	1,650,000
10% stock dividend				165,000
Shares Issued	Sep 30 2019	220,000
		2,420,000	0.25	605,000
	Weighted Average outstanding shares			2,420,000

	Dates	Shares	Fraction	Weighted
Shares Outstanding	March 31,2020	2,420,000	0.25	605,000
Shares Issued	Dec 31 2020	4,510,000	0.75	3382500
	Weighted Average outstanding shares			3987500

Note: on March 31 it was the outstanding shares before issue of the new shares that is 2,420,000

	Dates	Shares	Fraction	Weighted
Shares Outstanding	March 31 2021	3,987,500	1	3,987,500
Adjustment for split				2
	Weighted Average outstanding shares			7,975,000

	Dates	Shares	Fraction	Weighted
Shares Outstanding	Jan 1 to Mar 31	4,510,000	0.25	1,127,500
Adjustment for split				2
Shares outstanding adjustment	Jan 1 to Mar 31	1127500	2	2255000
Shares outstanding adjustment	April 1 to Dec 2021	4,510,000	0.75	3,382500
Adjustment For split	April 1 to Dec 2021			2
				6,765,000
	Weighted Average outstanding shares			9,020,000