Question

Flint Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $12 par common stock. At no time has Flint issued any potentially dilutive securities. Listed below is a summary of Flint’s common stock activities. 1. Number of common shares issued and outstanding at December 31, 2018 2,160,000 2. Shares issued as a result of a 12% stock dividend on September 30, 2019 259,200 3. Shares issued for cash on March 31, 2020 2,190,000 Number of common shares issued and outstanding at December 31, 2020 4,609,200 4. A 2-for-1 stock split of Flint’s common stock took place on March 31, 2021.

Compute the weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement.

shares

Compute the weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement.

shares

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement.

shares

Compute the weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement.

shares

Answer 1

a. Weighted-average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement:-

Outstanding shares at beginning of 2019 * (100% + Stock dividend)
= 2,160,000 * 112%
= 2,419,200 shares

b. Weighted-average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement:-
Outstanding shares at beginning of 2019 + Weighted average number of shares issued
= 2,419,200 + 2,190,000 * 9 / 12
= 2,419,200 + 2,190,000 * 0.75
= 2,419,200 + 1,642,500
= 4,061,700 shares

c. Weighted-average number of common shares to be used in computing earnings per common share for 2020 on the 2021 comparative income statement:-
= 2019 Weighted average number of share outstanding * Retrospective adjustment of stock split
= 4,061,700 * 2
= 8,123,400 shares

d. Weighted-average number of common shares to be used in computing earnings per common share for 2021 on the 2021 comparative income statement:-
Number of outstanding shares at beginning of 2021 * Retrospective adjustment of stock split
= 4,609,200 * 2
= 9,218,400 shares