The following information was obtained from Rando Corporation records on December 31, 2019.
Preferred Shares, $3 cumulative*, 25,000 shares authorized and outstanding |
$450,000 |
Common Shares, unlimited authorization, 180,000 shares outstanding |
$500,000 |
Retained Earnings |
$760,000 |
*no dividends have been declared in 2019 and 2020
Assume the following share transactions occurred in 2020:
Apr 1 |
Issued 120,000 common shares at $13.00 per share. |
Oct 1 |
Repurchased and cancelled 60,000 common shares at $15.00 per share. |
) Calculate the weighted average of common shares for year ended December 31, 2020.
b) Calculate the earning per share for year ended December 31, 2020. Assume profit for 2020 was $450,000.
(a)
Computation of Weighted Average Number of Share:
Weighted Average Number of share = (180000 shares * 3/12) + (300000 shares * 6/12) + (240000 shares * 3/12)
= 45000 shares + 150000 shares + 60000 shares
= 255000 shares.
(b)
Computation of Earnings per share:
Net profit = $450000
Less: Preferred stock Dividend = (25000 shares * $3)*2 = $150000
Earnings available of common shareholder = $300000
Earning per share = Earnings available of common shareholder / Weighted Average Number of share
= $300000 / 255000
= $1.18
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