Question

Corp. had 468,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.

On January 1, 2021, Coronado Corp. had 468,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account. February 1 Issued 115,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 96,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 63,000 shares of treasury stock Determine the weighted-average number of shares outstanding as of December 31, 2021. The weighted-average number of shares outstanding       Assume that Coronado Corp. earned net income of $3,288,000 during 2021. In addition, it had 105,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2021, using the weighted-average number of shares determined in part (a). (Round answer to 2 decimal places, e.g. $2.55.) Earnings Per Share Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2021. (Round answer to 2 decimal places, e.g. $2.55.) Earnings Per Share       Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $411,000 (net of tax). Compute earnings per share for 2021.

Answer 1

A.Weighted average no of shares outstanding

Event	date outstanding	shares outstanding	stock dividend restatement	stock split restatement	no of months	/12 momths	Weighted shares
Beginning balance	Jan 1 - Feb 1	468,000	1.1	3.0	1	12	128,700
Issued shares	Feb 1 - March 1	583,000	1.1	3.0	1	12	160,325
Stock dividend	March 1- May 1	641,300		3.0	2	12	320,650
Reacquired shares	May 1- June 1	545,300		3.0	1	12	136,325
Stock split	June 1- Oct 1	1,635,900			4	12	545,300
Reissued shares	Oct 1- Dec 31	1,698,900			3	12	424,725
							1,716,025

Weighted average no of shares =1,716,025 shares

B.

Earnings per share = net income - preferred dividend/ Weighted average shares

=$3,288,000-$0/1,716,025

=$1.91

C.

Earnings per share = Net income - preferred dividend / Weighted average shares

=$3,288,000-$945,000 / 1,716,025

=$1.36

* 105,000@$100 ×9%=$945,000

D.

Net income =$3,288,000

Add: Loss from discontinued operations =$411,000

Income from continuing operations=$3,699,000

EPS= $3,699,000/1,816,025 =$2.15

(-) Loss from discontinued operations =$411,000/1,716,025 =($0.23)

Net income=$1.91

_____×_____

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