Question

Skysong Inc. presented the following data.

Net income		$2,350,000
Preferred stock: 52,000 shares outstanding, $100 par, 9% cumulative, not convertible		5,200,000
Common stock: Shares outstanding 1/1		686,400
Issued for cash, 5/1		270,000
Acquired treasury stock for cash, 8/1		148,800
2-for-1 stock split, 10/1

Compute earnings per share. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share

$enter earnings per share rounded to 2 decimal places

Answer 1

Particulars	Number of shares	Share outstanding	Stock Split Restatement	No. of months	Weighted-average shares
Shares outstanding	686400	686400	2	4	457600
Issued Shares	270000	956400	2	3	478200
Treasury stock	148800	807600	2	2	269200
Stock split	807600	1615200	1	3	403800
Total weighted average number of shares outstanding	1711746

Earnings per share = (Net income - Preferred dividend) /  Total weighted average number of shares outstanding

=(2350000-5200000*9%)/1711746

= $1.10 per share