Cullumber Corporation had 102,000 common shares outstanding on December 31, 2019. During 2020, the company issued...

Cullumber Corporation had 102,000 common shares outstanding on December 31, 2019. During 2020, the company issued 12,000 shares on March 1, retired 6,800 shares on July 1, issued a 20% stock dividend on October 1, and issued 18,300 shares on December 1. For 2020, the company reported net income of $408,000 after a loss from discontinued operations of $64,000 (net of tax). The company issued a 2-for-1 stock split on February 1, 2021, and the company’s financial statements for the year ended December 31, 2020, were issued on February 28, 2021.

Calculate earnings per share for 2020 as it should be reported to shareholders. (Round answer to 2 decimal places, e.g. 15.75.)

Net income per share
		Earnings per share
Income per share before discontinued operations		$enter a dollar amount
Discontinued operations loss per share, net of tax		$enter a dollar amount

Expert Solution

Answer:

Finding the number of outstanding shares for Dec 31 ,2020
Details	Number of shares	Weight of Period	Weighted no of shares	Total no of Outstanding shares	Remarks
Commom shares outstanding on Dec 31,2019	102000	1	102000	102000
Add March 1 issue of shares	12000	=10/12	10000	112000
Less : July 1 retiring of shares	(6800)	0.50	(3400)	108600
Oct 1 Issue of Stock dividends 20%	21720	1	21720	130320	no time weight for shares issued free of consideration, considered effective from start of previous periods
Dec 1. issue of shares	18300	=1/12	1525	131845
2 for 1 stock split done on Feb 28 2021				263690	2-for -1 split done on Feb 28,2021 but needs to be considered as if happened during the end of prior period as the shares are without consideration and financial statement not published by Feb 28,20121
So total no of Common shares outstanding as on Dec 31 ,2020 for EPS calculation =263690

EPS Calculation
Total Outstanding common shares as on Dec 31,2020	263690
Net Income before loss from discountinued operation	$ 472000
EPS before loss from discountinued operation	$ 1.79
After tax Income/(Loss) From Discontnued Operation	(64000)
Loss per share from discontinued Operation	$ (0.24)
Net Income per share =$1.79-$0.24=	$ 1.55

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