Question

E11-12 Chinook Corporation started the year ended November 30, 2018, with 180,000 common shares and no...

E11-12 Chinook Corporation started the year ended November 30, 2018, with 180,000 common shares and no preferred shares issued. The following changes in share capital occurred during the year:

Feb.

28

Issued 45,000 common shares for $775,000.

Sept.

4

Issued 60,000 $1 cumulative preferred shares for $1.5 million.

Nov.

1

Issued 18,000 common shares in exchange for land. The shares were trading for $20 on this date and the fair value of the land was $345,000.

30

Reported net income of $963,750.

30

Declared the quarterly cash dividend to the preferred shareholders of record on December 14, payable on December 31.

Instructions

(a) Calculate the income available for the common shareholders.

(b) Calculate the weighted average number of common shares for the year.

(c) Calculate the basic earnings per share for the year.

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Answer #1

Ans:

a) income available for common shareholders
net income reported 963750
less: cash dividend (1500000*1%*1/4) 3750
income available to common shareholder 960000
2) weighted average no of share
share outstanding 180000
share issed (45000*9/12) 33750
issue for other than cash (18000/12) 1500
weighted average no of share 215250
3) Basic earning per share = net profit atributable to equity/weighted average no of equity share outstanding
basic earning per share = 960000/215250 = 4.46
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