Question

2 The following information is available for Barone Corporation in 2018 with Net Income of $20,250,000. The company also had Preferred Stock, 6%, $50 par value with 150,000 shares authorized and 135,000 issued and outstanding. The full dividend was paid this year. January 1, 2018 Shares outstanding 4,000,000 April 1, 2018 Shares issued 640,000 July 1, 2018 Treasury shares purchased 240,000 October 1, 2018 Shares issued in a 30% stock dividend November 1, 2018 2::1 Split

Compute the basic EPS. (Please show all of your work)

Answer 1

Step-1	Earnings for Earning per share	20,250,000
Step-2	Weighted average outstanding Shares
	Dates	Share outstanding	Restatement	Split off	Portion of year outstanding	Weighted shares
	Jan 1-Mar 31	4,000,000	1.3	2	3/12	2,600,000
	Apr 1-Jun 30	4,640,000	1.3	2	3/12	3,016,000
	Jul 1-Oct 1	4,400,000	1.3	2	3/12	2,860,000
	Oct 1-Oct 30	4,400,000	1.3	2	1/12	953,333
	Nov 1-Dec31	4,400,000	-	2	3/12	1,466,667
	Total					10,896,000
Step-3	Earnings per share	$1.86	( 20,250000 /10,896,000)