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During the year ended December 31, 2017, Gluco, Inc., split its stock on a 4-for-1 basis....

During the year ended December 31, 2017, Gluco, Inc., split its stock on a 4-for-1 basis. In its annual report for 2016, the firm reported net income of $936,100 for 2016, with an average 293,400 shares of common stock outstanding for that year. There was no preferred stock.

a. What amount of net income for 2016 will be reported in Gluco's 2017 annual report?

b. Calculate Gluco's earnings per share for 2016 that would have been reported in the 2016 annual report. (Round your answer to 2 decimal places.)

c. Calculate Gluco's earnings per share for 2016 that will be reported in the 2017 annual report for comparative purposes. (Round your answer to 2 decimal places.)

Solutions

Expert Solution

Answer:
(a)
Net income for 2016 that will be reported in Gluco's 2017 annual report = $ 936,100
(b)
Earning per share
                =    Net income / Weighted average shares outstanding
                =     $ 936,100 / 293,400 Shares
                =     $ 3.19 per Share
Earning per share reported in 2016 annual report = $ 3.19 per Share
(c )
Stock Split = 4 for 1 i.e., 293,400 Shares x 4 = 1,173,600 Shares
Earning per share
                =    Net income / Adjusted Weighted average shares outstanding
                =     $ 936,100 / 1,173,600 Shares
                =     $ 0.80 per Share
Earning per share for comparative purposes   = $ 0.80 per Share

ekkarill92 answered 2 years ago
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