Question

For the year ended December 31, 2021, Norstar Industries reported net income of $950,000. At January...

For the year ended December 31, 2021, Norstar Industries reported net income of $950,000. At January 1, 2021, the company had 1,010,000 common shares outstanding. The following changes in the number of shares occurred during 2021:

Apr. 30 Sold 70,000 shares in a public offering.
May 24 Declared and distributed a 5% stock dividend.
June 1 Issued 78,000 shares as part of the consideration for the purchase of assets from a subsidiary.


Required:

Compute Norstar's earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "EPS" answer to 2 decimal places. Do not round intermediate calculations.)

Numerator / Denominator = Earnings Per Share

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Answer #1
Numerator / Denominator = Earnings Per Share
950 1155 0.822510823
Earning per Share (EPS):
Net Income – Preferred Dividends / Weighted Average number of Common shares outstanding
$ 950/1155 shares=$0.822511 per share
Where:- Weighted Average number of Common shares outstanding
(1010000 shares*1.05)+(70000 shares*8 months/12 months)*1.05+(78000 shares*7 months/12 months
1060500+49000+45500
1155000 shares
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