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1.On December 31, 2015, Emmanuel Company had 65,000 shares of common stock issued and outstanding. Emmanuel...

1.On December 31, 2015, Emmanuel Company had 65,000 shares of common stock issued and outstanding. Emmanuel issued a 11% stock dividend on June 30, 2016. On October 1, 2016, 18,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2016?

2. Ellen Kelly Inc. had 49,000 shares of $.50 par common stock 14,000 shares of 5%, $20 par cumulative preferred stock and 24,000 shares of 5%, $10 par preferred stock convertible into 14,400 common shares. Net income after taxes was $53,541. No dividends were declared during the year. The numerator in the Basic EPS would be

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Answer #1

1. Appropriate number of Shares to be used in basic EPS cmputation = 54150 shares

Total Common stock issed & outstanding on 31.12.15 = 65000

Add :Stock dividend on 30.06.16     = 7150 (65000 x11 %)

Less :Treasury Stock Acquired    = 18000

= 54150

2. Numerator for EPS = $27541

Earning after tax = $53,541

Less :

Cumilative Preference Dividend = $14,000 ($14000 x $20 X 5%)

Convertible Preference Dividend = $12,000 ($24000 x $10 X 5%)

= $27541

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