Question

On January 1, 2021, Stellar Corp. had 474,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.

February 1		Issued 120,000 shares
March 1		Issued a 10% stock dividend
May 1		Acquired 98,000 shares of treasury stock
June 1		Issued a 3-for-1 stock split
October 1		Reissued 58,000 shares of treasury stock Determine the weighted-average number of shares outstanding as of December 31, 2021. The weighted-average number of shares outstanding 1745700 Assume that Stellar Corp. earned net income of $3,324,000 during 2021. In addition, it had 99,000 shares of 8%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a). Earnings Per Share ?

Answer 1

Answer : Earnings Per Share ; $1.904

Explanation :

Earnings Per Share

= (Net income - Preferred stock dividend **) / Weighted-average number of shares outstanding

** Note : Nonconvertible, noncumulative preferred stock which are not declare and paid should not be deducted from net income.

= $3,324,000 / 1,745,700 shares

= $1.904 per share