At the beginning of the current year, Hardin Company had 20,000 shares of $10 par common stock...

Question:

At the beginning of the current year, Hardin Company had 20,000 shares of $10 par common stock outstanding. During the year, it engaged in the following transactions related to its common stock, so that at year-end it had 63,800 shares outstanding:

Apr. 2 Issued 5,000 shares of stock.
June 4 Issued 4,000 shares of stock.
July 1 Issued a 10% stock dividend.
Sept. 28 Issued a 2-for-1 stock split, reducing the par value to $5 per share.
Oct. 3 Reacquired 1,000 shares as treasury stock.
Nov. 27 Reissued the 1,000 shares of treasury stock.

Required:

Determine the weighted average number of shares outstanding for computing the current earnings per share.

Earning Per Share:

Earning per share calculated the amount of profit that each common stock is earning. The earning per share is an important ratio that the investors use to compare different investment opportunities.

Answer and Explanation:

Date No. of share Days Weighted no of share
01/01 20,000 91 days 4,986.301
02/04 25,000 63 days 4,315.068
04/06 29,000 27 days 2,145.205
01/07 31,900 89 days 7,778.356
28/09 62,800 5 days 860.274
03/10 61,800 55 days 9,312.329
27/11 62,800 35 days 6,021.918


Total weighted average share = 4,986.301 + 4,315.068 + 2,145.205 + 7,778.356 + 860.274 + 9,312.329 + 6,021.918

Total weighted average share = 35,419.45


Learn more about this topic:

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How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
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