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please show all steps. xxx Company had 25,000 common shares outstanding at the beginning of 2016....

please show all steps.

xxx Company had 25,000 common shares outstanding at the beginning of 2016. On May 1, the company sold an additional 2,000 shares. On July 1, the company retired 1,000 shares and on November 1, the company declared a 2 for 1 stock split. The net income for 2016 was $545,000 and the preferred shareholders received $100,000 of dividends. xxx Company has a December 31 year end.

REQUIRED: Calculate the Earnings per Share for 2016.

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Answer #1

Opening shares = 25000

Additional shares outstanding through out the year = 2000*(8/12) = 1333.33 i.e. 1334 shares

Retirement of 1000 shares on July 1 = 1000*(6/12) = 500

Total number of shares outstanding before stock split = 25000+1334-500 = 25834

Total number of shares outstanding after stock split = 25834*2 = 51668

Earnings attributable to equity shareholders = 545000-100000 = 445000

Earnings per share for 2016 = Earnings attributable to equity shareholders/Total number of shares outstanding

= 445000/51668 = 8.61

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