Question

On January 1, 2018, Oriole Corp. had 459,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account.

February 1		Issued 126,000 shares
March 1		Issued a 10% stock dividend
May 1		Acquired 101,000 shares of treasury stock
June 1		Issued a 3-for-1 stock split
October 1		Reissued 62,000 shares of treasury stock

Determine the weighted-average number of shares outstanding as of December 31, 2018. The weighted-average number of shares outstanding Assume that Oriole Corp. earned net income of $3,383,000 during 2018. In addition, it had 96,000 shares of 10%, $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 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.) Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $434,000 (net of tax). Compute earnings per share for 2018. (Round answer to 2 decimal places, e.g. $2.55.)

Answer 1

1)

Event	Dates outstanding	shares outstanding	Restatement	Fraction of year	Weighted shares
Beginning	1Jan -1 feb	459000	1.1*3	1/12	126225
issued	1 feb-1 mar	126000+459000=585000	1.1*3	1/12	160875
stock dividend	1mar-1may	585000(1+.10)=643500	3	2/12	321750
Treasury stock	1may -1june	643500-101000=542500	3	1/12	135625
stock split	1 june -1 oct	542500*3=1627500		4/12	542500
reissue	1 oct31dec	1627500+62000		3/12	422375
Weighted average number of shares					1709350

2)Earning per share =Net Income /Weighted average number of shares

     = 3,383,000 / 1,709,350

        = $ 1.98 per share

3)Earning per share : [3383000-960000 preferred dividend ] /1709350

            = 2423000/1709350

           = $ 1.42

**preferred dividend =96000*100*.10=960000

4)

Income From continuing operations	3817000	3817000/1709350=$ 2.23
loss from discontinued operations	(434000)	(434000)/1709350= (.25)
Net Income   [	3383000	3383000/1709350=1.98