Question

On January 1, 2017, Carla Vista Ltd. had 510,000 common shares outstanding. During 2017, it had the following transactions that affected the common share account:

Feb. 1		Issued 183,000 shares.
Mar. 1		Issued a 12% stock dividend.
May 1		Acquired 210,000 common shares and retired them.
June 1		Issued a 3-for-1 stock split.
Oct. 1		Issued 51,000 shares.

The company’s year end is December 31.

Determine the weighted average number of shares outstanding as at December 31, 2017.

Assume that Carla Vista earned net income of $3,525,000 during 2017. In addition, it had 90,000 of 11%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2017.

Calculate earnings per share for 2017, using the weighted average number of shares determined above

Assume that Carla Vista earned net income of $3,525,000 during 2017. In addition, it had 90,000 of 11%, $100 par, non-convertible, cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2017.

Calculate earnings per share for 2017, using the weighted average number of shares determined above

Assume that Carla Vista earned net income of $3,525,000 during 2017. In addition, it had 90,000 of 11%, $100 par, non-convertible, non–cumulative preferred shares outstanding for the entire year. Because of liquidity limitations, however, the company did not declare and pay a preferred dividend in 2017. Assume that net income included a loss from discontinued operations of $449,000, net of applicable income taxes.

Calculate earnings per share for 2017.

Answer 1

weighted average number of shares outstanding
Date	shares issued	period used	Outstanding on Dec 31
OB	510000	12/12	510000
1-Feb	183000	11/12	167750
1-Mar	83160	10/12	69300
1-May	-210000	8/12	-140000
1-Jun	NE
1-Oct	51000/3	3/12	4250
Outstanding before split			611300
Outstanding after split (3/1)			1833900

2017 net profit	$3,525,000
W.A. Outstanding shares	1833900
EPS	$1.92
2017 net profit	$3,525,000
Less: preferred dividend (90000*100*11%)	($990,000)
Balance net profit	$2,535,000
W.A. Outstanding shares	1833900
EPS	$1.38
2017 net profit	$3,525,000
Add: loss from discontinued opera	$449,000
Balance net profit	$3,974,000
W.A. Outstanding shares	1833900
EPS	$2.17