Question
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Clark Fork, Inc. had 100,000 shares of common stock outstanding on December 31, 2014. The following...
Clark Fork, Inc. had 100,000 shares of common stock outstanding on December 31, 2014. The following changes occurred during 2015 and 2016:
| April 1, 2015 | issued an additional 10,000 shares | |
| July 1, 2015 | 2:1 stock split | |
| October 1, 2015 | 5,000 treasury shares purchased | |
| December 1, 2015 | reissued the 5,000 treasury shares | |
| March 1, 2016 | 50% stock dividend | |
| July 1, 2016 | issued an additional 30,000 shares |
The 2016 income statement will include earnings per share computations for 2015 and 2016.
For calculating basic earnings per share for that statement, what is the weighted average number of shares outstanding for the year 2015? What is the weighted average number of shares outstanding for the year 2016?
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Expert Solution
| CALULATION OF THE WEIGHTED AVERAGE NUMBER OF SHARES FOR THE YEAR 2015 | |||||||||
| Shares | X | O/s No. of Months | Divide By | 12 months | = | 0/s No. of Shares | |||
| Opening Balance | 100000 | X | 12 | "/" By | 12 | = | 100000 | ||
| April 01, 2015 , issue additional shares | 10000 | X | 9 | "/" By | 12 | = | 7500 | ||
| July 01, 2015 , issue stock split Shares | 110000 | X | 6 | "/" By | 12 | = | 55000 | ||
| Oct 01 , 2015 | -5000 | X | 3 | "/" By | 12 | = | -1250 | ||
| Dec 01, 2015 | 5000 | X | 1 | "/" By | 12 | = | 416.67 | ||
| total Weighted average No. of Shares for the year 2015 = | 1,61,666.67 | Shares | |||||||
| CALULATION OF THE WEIGHTED AVERAGE NUMBER OF SHARES FOR THE YEAR 2016 | |||||||||
| Shares | X | O/s No. of Months | Divide By | 12 months | = | 0/s No. of Shares | |||
| Opening Balance | 220000 | X | 12 | "/" By | 12 | = | 220000 | ||
| March 1, 2016 | 110000 | X | 10 | "/" By | 12 | = | 91,666.67 | ||
| July 01, 2016 | 30000 | X | 6 | "/" By | 12 | = | 15000 | ||
| total Weighted average No. of Shares for the year 2016 = | 3,26,666.67 | Shares | |||||||
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