Question

The Alford Group had 260,000 shares of common stock outstanding at January 1, 2021. The following activities affected common shares during the year. There are no potential common shares outstanding.
  

2021
Feb.		28		Purchased 6,000 shares of treasury stock.
Oct.		31		Sold the treasury shares purchased on February 28.
Nov.		30		Issued 24,000 new shares.
Dec.		31		Net income for 2021 is $1,419,000.
2022
Jan.		15		Declared and issued a 2-for-1 stock split.
Dec.		31		Net income for 2022 is $1,419,000.

Required:

1. Determine the 2021 EPS. (Do not round intermediate calculations.)
2. Determine the 2022 EPS.
3. At what amount will the 2021 EPS be presented in the 2022 comparative financial statements?

(For all requirements, Enter your answers in thousands.)

Answer 1

ANSWER

Part 1
Calculation of Weighted average number of shares:
Beginning Shares			260,000
Less: Feb 28	6,000/12*10		-5,000
Add: Oct 31	6,000/12*2		1,000
Add: Nov 30	24,000/12		2,000
Weighted Avg No of Shares		b	258,000
Net Income		a	$   1,419,000
2021 EPS		a/b	$              5.50
Part 2
Calculation of Weighted average number of shares:
Beginning Shares			260,000
Less: Feb 28			-6,000
Add: Oct 31			6,000
Add: Nov 30			24,000
			284,000
Stock Split	284,000*2		568,000
Weighted Avg No of Shares		b	568,000
Net Income		a	$   1,419,000
2022 EPS		a/b	$              2.50
Part 3
2021 EPS in 2022 Comparative Statement:
Net Income		a	$   1,419,000
No of Shares (258,000*2)		b	516,000
2021 EPS in 2022 Comparative Statement:		a/b	$              2.75

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