Question

In: Accounting

Assume that MawnMawn Associates began the year with 76,000 outstanding shares and implemented a 10 %...

Assume that

MawnMawn

Associates began the year with

76,000

outstanding shares and implemented a

10 %

stock dividend on

January

1 of the current year.

MawnMawn

employees held

80,000

options that were granted on

April

1. If​ exercised, there would be

21,600

incremental shares. On

June

​1,

MawnMawn

implemented a​ 3-for-1 stock split.​ Finally, on

August

​1, the company purchased

133,800

shares to be held in the treasury.

Requirement

Compute the denominator for basic and diluted earnings per share. Assume that the stock split also applies to the options.

Complete the table below to compute the denominator for basic and diluted earnings per share​ (EPS). Assume that the stock split also applies to the options. ​(Assume the options are dilutive. Combine the opening balance and the

January

1 stock dividend on the first line of the table. Complete all answer boxes. Enter a​ "0" for any zero balances. Enter a decrease in shares with a minus sign or​ parentheses.)

Weight by

Number

Number of Months

Weighted-Average Shares for

Date

Event

of Shares

Shares Are Outstanding

Basic EPS

Diluted EPS

1/1

Beg. balance and stock dividend

4/1

Option exercise

Subtotal before the stock split

6/1

3-1 Stock Split

Subtotal after the stock split

8/1

Treasury Stock Purchase

12/31

Balance

Solutions

Expert Solution

Date Events Shares Outstanding Effect of stock dividend Effect of Share split Fraction of the year outstanding Weighted avg. shares for
Basic EPS		 Weighted avg. shares for
Dilutive EPS
a b=10% c=3 for 1 d e f
1-Jan Beg balance                      76,000.00                            83,600            250,800 12/12                      250,800                         250,800
1-Apr Options granted                      21,600.00                                      -                64,800 9/12                                  -                             48,600
1-Aug Purchased treasure stock                  -133,800.00                                      -                          -   5/12                       -55,750                         -55,750
Weighted avg no. of shares outstanding                      195,050                         243,650

ekkarill92 answered 2 years ago
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