Question

On January 1, 2018, Coronado Corp. had 491,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

February 1 Issued 114,000 shares

March 1 Issued a 10% stock dividend

May 1 Acquired 103,000 shares of treasury stock

June 1 Issued a 3-for-1 stock split

October 1 Reissued 60,000 shares of treasury stock

a. Determine the weighted-average number of shares outstanding as of December 31, 2018.

b. Assume that Coronado Corp. earned net income of $3,619,000 during 2018. In addition, it had 98,000 shares of 9%, $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 2018. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a).

c. Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2018.

d. Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $431,000 (net of tax). Compute earnings per share for 2018.

Answer 1

a) Weighted Average Number of shares outstanding :-

Event	Date Outsta.	Shares Outstanding	Stock Dividend Restatement	Stock Split Restatement	Number of Months	Divid by months	Weighted Shares
Beginning Bal.	Jan 1-Feb 1	491000	1.1	3	1	12	135025
Issued Shares	Feb 1-Mar 1	605000	1.1	3	1	12	166375
Stock Dividend	Mar 1-May 1	665500		3	2	12	332750
Reacquired Shares	May 1-Jun 1	562500		3	1	12	140625
Stock Split	Jun 1-Oct 1	1687500			4	12	562500
Reissued Shares	Oct 1-Dec 31	1747500			3	12	436875
Total							1774150

b) Earning Per Share :-

= (Net Income - Preferred Dividend) / Weighted Average Shares

= $3619000 / 1774150

= $2.04 per share

c) Earning Per Share :-

= (Net Income - Preferred Dividend) / Weighted Average Shares

= ($3619000 - ((98000*$100)*9%)) / 1774150

= ($3619000 - $882000) / 1774150

= $2737000 / 1774150

= $1.54 per share

d)

Particulars	Earning Per Share
Income from Continuting Operation (See Below)	$2.28
Less : Loss from Discounting Operation ($431000/1774150)	($0.24)
Net Income Per Share	$2.04

Income from Contrnuting Operation Per Share ;-

Net Income	$3619000
Add : Loss from discontinung Operation	$431000
Income from Continuing Operation (A)	$4050000
Weighted Avg. Shares (B)	1774150
Earning Per Share (A/B)	$2.28