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For the year ended December 31, 2018, Norstar Industries reported net income of $955,000. At January...

For the year ended December 31, 2018, Norstar Industries reported net income of $955,000. At January 1, 2018, the company had 1,030,000 common shares outstanding. The following changes in the number of shares occurred during 2018:

Apr. 30 Sold 75,000 shares in a public offering.
May 24 Declared and distributed a 5% stock dividend.
June 1 Issued 84,000 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. (Enter your answers in thousands.)

business   accounting   
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Answer #1

Answer:

Earnings per share (EPS):

Net Income = preferred dividend / weighted average number of common shares outstanding
=$955000 / 1183000 shares
=$0.807269653 per share

where : weighted average number of common shares outstanding
=(1030000 shares * 1.05)+(75000 shares * 8/12)*1.05+(84000 shares*7/12)
=1081500+52500+49000
=1183000

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