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Benn, Incorporated, has 6,000,000 shares of common stock outstanding on December 31, 2017. An additional 1,000,000...

Benn, Incorporated, has 6,000,000 shares of common stock outstanding on December 31, 2017. An additional 1,000,000 shares of common stock were issued on April 1, 2018, and 500,000 more on July 1, 2018. On October 1, 2018, Benn declared a 10% stock dividend. On November 1, Benn purchased 120,000 of its own stock. What was the number of shares to be used in computing basic earnings per share?

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Expert Solution

Number of shares to be used in computing basic earnings per share                                                              7,680,000

Working:

Particulars Shares Holding Months Stock Dividend/Stock Split [Restatement] Weighted Average Shares [Bal.*Holding Months/12*Restatement]
Opening Share     6,000,000                               3                                 1.10                                                              1,650,000
Further Isssue     1,000,000
Bal.     7,000,000                               3                                 1.10                                                              1,925,000
Further Isssue        500,000
Bal.     7,500,000                               3                                 1.10                                                              2,062,500
Stock Dividend        750,000
Bal.     8,250,000                               1                                                                 687,500
Treasury Stock      (120,000)
Bal.     8,130,000                               2                                                              1,355,000
Total                             12                                                              7,680,000

ekkarill92 answered 1 year ago
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