Question

Earnings per Share Leland Corporation began the year with 140,000 shares of common stock outstanding. On...

Earnings per Share Leland Corporation began the year with 140,000 shares of common stock outstanding. On March 1 an additional 12,000 shares of common stock were issued. On August 1, another 18,000 shares of common stock were issued. On November 1, 8,000 shares of common stock were acquired as Treasury Stock. Leland Corporation's net income for the calendar year is $ 500,000.

Required

Calculate the company's earnings per share.

Earnings per Share $Answer

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Answer #1

Solution:

Date Calculation of total number of shares: Number
Opening shares     140,000
1-Mar Add: Additional common stock = 12,000*10/12        10,000
1-Aug Add: Additional common stock = 18,000*5/12          7,500
1-Nov Less: Treasury Stock = 8,000* 2/12        (1,333)
Total number of shares     156,167
EPS = Earning/Total no. of shares
        = 500,000/156167 = 3.202
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