Question

On January 1, 2018, Shamrock Corp. had 478,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account. February 1 Issued 120,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 102,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 59,000 shares of treasury stock Determine the weighted-average number of shares outstanding as of December 31, 2018. The weighted-average number of shares outstanding LINK TO TEXT Assume that Shamrock Corp. earned net income of $3,582,000 during 2018. In addition, it had 100,000 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 2018.

Compute earnings per share for 2018, 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 2018. (Round answer to 2 decimal places, e.g. $2.55.) Earnings Per Share

Answer 1

1) Weighted Average Outstanding shares as on Dec 31, 2018 :

Date	Before split shares issued	outstanding period	After split - shares	Outstanding as on Dec 31, 2018
Jan1	478000	12 months	1434000	1434000*12/12= 1434000
Feb 1	120000	11 months	360000	360000*11/12= 330000
Mar 1	59800	10 months	179400	179400*10/12= 149500
May 1	-102000	8 months	-306000	-306000*8/12= - 204000
Oct 1	-	3 months	59000	59000*3/12 = 14750
			Total Outstanding shares as on Dec 31 2018 =	1724250

2) EPS (for non-cumulative interest not been paid, not made payable as non-cumulative) =( Net Income $3582000 - preferred dividend $0 )/ Shares outstanding 1724250 shares = $2.08 per share

3) EPS (for cumulative interest not been paid, but made payable) =

=( Net Income $3582000 - preferred dividend $10,000,000 * 9% )/ Shares outstanding 1724250 shares

= (3582000 - $900,000) / 1724250 = $1.56 per share