Question

1. Comparative Earnings per Share Lucas Company reports net income of $2,520 for the year ended December 31, 2019, its first year of operations. On January 4, 2019, Lucas issued 9,000 shares of common stock. On August 2, 2019, it issued an additional 3,600 shares of stock, resulting in 12,600 shares outstanding at year-end. During 2020, Lucas earned net income of $18,120. It issued 3,000 additional shares of stock on March 3, 2020, and declared and issued a 2-for-1 stock split on November 3, 2020, resulting in 31,200 shares outstanding at year-end. During 2021, Lucas earned net income of $29,952. The only common stock transaction during 2021 was a 20% stock dividend issued on July 2, 2021. If required, round your final answers to two decimal places. Required: 1. Compute the basic earnings per share that would be disclosed in the 2019 annual report. Vetcome - 29 20 $1 .24 per share (9.000X + 12 VODX 5112) = 10500 To so 2. Compute the 2019 and 2020 comparative basic earnings per share that would be disclosed in the 2020 annual report. (12 600X2X1 +212,0D+ S000) *zym +131200x1112) 2020 - $ 1 00 per share 42001 20800 52.00 - 20 2019: $! -12 per share _18120 30200.60 3. Compute the 2019, 2020, and 2021 comparative basic earnings per share that would be disclosed in the 2021 annual report. Net income 29asa 1 112) 2021: Sl 0.80 per Share (31 260XT.x 12+ [131200+ (31200 * = 31200 x 1.2x6112 + 374408-12 2020: per share - 18720 + 187770 = 37440 2019: $ per share 0.24 = 0.12

Answer 1

1.Basic Earning per Share in 2019 = Net Income/ Total Weighted Average Shares Outstanding

Net Income = $2520

Total Weighted Average Shares Outstanding = 9000*7/12 + 12600*5/12 = 5250 + 5250 = 10500

Basic Earning Per Share in 2019 = 2520/10500 = $0.24

=$0.24 per Share

2. Basic Earning Per Share in 2020 = Net Income / Total Weighted Average Shares Outstanding

Net Income = $18120

Total Weighted Average Shares Outstanding = 12600*2*2/12 + ((12600+3000)*2*8/12)+31200*1*2/12 = 4200 + 20800 + 5200 + 30200

Basic Earning per Share in 2020 = 18120/30200 = $0.60 per Share

Basic Earning per Share in 2019 = $0.24 / 2 = $0.12 per Share

3. Basic Earning Per Share in 2021 = Net Income / Total Weighted Average Shares Outstanding

Net Income = $29952

Total Weighted Average Shares Outstanding = (31200*1.2*6/12) + (31200+(31200*20%)*1*6/12)+(31200*1.2*6/12) = 18720+18720 = 37440

Basic Earning per Share in 2021 = $29952 / 37440 = $0.80 per share

Basic Earning per Share in 2020 = $ 0.60 per Share

Basic Earning per Share in 2019 = $ 0.12 per Share