Question

On January 1, 2018, Sweet Corp. had 472,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

February 1 Issued 125,000 shares

March 1 Issued a 10% stock dividend

May 1 Acquired 100,000 shares of treasury stock

June 1 Issued a 3-for-1 stock split

October 1 Reissued 63,000 shares of treasury stock

( A ) Determine the weighted-average number of shares outstanding as of December 31, 2018.

The weighted-average number of shares outstanding ___________________________???

( B) Assume that Sweet Corp. earned net income of $3,568,000 during 2018. In addition, it had 101,000 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). (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share $__________________????

( C) Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2018. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings Per Share $_________________???? (C)Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $422,000 (net of tax). Compute earnings per share for 2018. (Round answer to 2 decimal places, e.g. $2.55.) Income Statement

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Answer 1

Part - (a)	Calculation of Weighted-average outstanding shares:-
	Dates	Shares	Stock Dividend Restatement	Stock split restatement	Fraction of year	Weighted
Beginning balance	Jan1 -Feb1	472,000	1.10	3	1/12	129,800
Issued shares	Feb1- March 1	597,000	1.10	3	1/12	164,175
Stock dividend	March 1 -May1	656,700		3	2/12	328,350
Reacquired shares	May1 - June 1	556,700		3	1/12	139,175
Stock split	June1 -Oct1	1,670,100			4/12	556,700
Reissued shares	Oct 1- Dec31	1,733,100			3/12	433,275
	Weighted-average outstanding shares					1,751,475
Part - (b)	EPS = (Net Income - Preferred Dividends) / Weighted-average outstanding shares
=	(3,568,000-0)/1,751,475 = $2.04
Part - (c)	EPS = (Net Income - Preferred Dividends) / Weighted-average outstanding shares
=	(3,568,000-(101,000*100*9%)/1,751,475 = $2.04
=	(3,568,000-909,000)/1,751,475 = $1.52
Part - (d)	Income statement (Partial)
	Net income			3,568,000
	Add : Loss from discontinued operations			422,000
	Income from continuing operations			3,990,000
	EPS:
	Income from continuing operations (3,990,000/1,751,475)			2.28
	Loss from discontinued operations (422,000/1,751,475)			(0.24)
	Net income			2.04