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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

ekkarill92 answered 1 year ago
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