Question

Vaughn Inc. presented the following data.

Net income $2,510,000
Preferred stock: 46,000 shares outstanding, $100 par, 8% cumulative, not convertible 4,600,000
Common stock: Shares outstanding 1/1 738,000
   Issued for cash, 5/1 279,600
   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
$

Answer 1

Earnings per share = $1.24 per share

Event	Dates Out standing	Shares Out standing	Stock split restatement	Months	/12 Months	Weighted shares
Beginning balance	Jan 1 - May 1	738,000	2	4	12	492000
Issued shares	May 1 - Aug 1	1017600	2	3	12	508800
Reacquired shares	Aug 1 - Oct 1	868800	2	2	12	289600
Stock split	Oct 1 - Dec 31	1737600	1	3	12	434400
Weighted-average number of shares outstanding						1724800

Earnings per share = (Net Income - Preferred Dividends ) / Weighted-Average Shares

Earnings per share = ($25,10,000 - $368000 ) / 1724800

= $21,42,000 / 1724800

= $1.24 per share