Question

Wildhorse Corporation had 118,000 common shares outstanding on December 31, 2019. During 2020, the company issued 14,000 shares on March 1, retired 6,500 shares on July 1, issued a 20% stock dividend on October 1, and issued 21,300 shares on December 1. For 2020, the company reported net income of $472,000 after a loss from discontinued operations of $67,600 (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.

QUESTION:

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

		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
Net income per share		$enter a total net income per share amount

Answer 1

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	118,000	1	118,000	118,000
Add March 1 issue of shares	14,000	=10/12	11,667	129,667
Less : July 1 retiring of shares	(6,500)	0.50	(3,250)	126,417
Oct 1 Issue of Stock dividends 20%	25,283	1	25,283	151,700	no time weight for shares issued free of consideration, considered effective from start of previous periods
Dec 1. issue of shares	21,300	=1/12	1,775	153,475
2 for 1 stock split done on Feb 28 2021				306,950	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 =306,950

EPS Calculation
Total Outstanding common shares as on Dec 31,2020	306,950
Net Income before loss from discountinued operation	$          539,600
EPS before loss from discountinued operation	$                1.76
After tax Income/(Loss) From Discontnued Operation	(67,600)
Loss per share from discontinued Operation	$            (0.220)
Net Income per share =$1.76-$0.22=	$                1.54