Question

Richdards Sweet Potatoes, Inc, had 10,000 shares of stock outstanding on January 1. During the year he sold 3,000 shares on March 31st, 6,000 shares on July 1st, and 8,000 shares on October 1st. If the Net Income for the year was $96,000, what was the approximate EPS? A. 7.11 B. 3.20 C. 3.56 D. 5.57 E. none of the listed choices

Answer 1

Date	Number of share issued	Time period	Weighted number of shares outstanding
Jan 1	10,000	12	10,000 x 12/12 = 10,000
Mar 31	3,000	9	3,000 x 9/12 = 2,250
July 1	6,000	6	6,000 x 6/12 = 3,000
Oct 1	8,000	3	8,000 x 3/12 = 2,000
Total			17,250

Earning per share = Net income/Weighted average number of common shares outstanding

= 96,000/17,250

= $5.57

Correct option is (D)

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