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On January 1, 2018, Algerian Delivery had 100,000 shares of common stock outstanding. The following transactions...

On January 1, 2018, Algerian Delivery had 100,000 shares of common stock outstanding. The following transactions occurred during 2018:

March 1: Reacquired 3,500 shares, accounted for as treasury stock.
September 30: Sold all the treasury shares.
December 1: Sold 12,500 new shares for cash.
December 31: Reported a net income of $302,750.

What is Algerian Deliverys earnings per share for the year ending in December 31,2018

Solutions

Expert Solution

Answer- Algerian Deliverys earnings per share for the year ending in December 31,2018 is = $3.06 per share.

Explanation- Earning per Share (EPS):

Net Income – Preferred Dividends / Weighted Average number of Common shares outstanding

= $302750/99000 shares

= $3.06 per share

Where-

Weighted Average number of Common shares outstanding= 100000 shares-(3500 shares*10 months/12 months)+(3500 shares*3 months/12 months)+ (12500 shares*1

months/12 months)

= 100000-2917+875+1042

= 99000 shares

ekkarill92 answered 2 years ago
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