Question

Exercise 16-15 Pearl Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,610,000 shares of $10 par common stock. At no time has Pearl issued any potentially dilutive securities. Listed below is a summary of Pearl's common stock activities. 1. 2. 3. Number of common shares issued and outstanding at December 31, 2018 Shares issued as a result of a 10% stock dividend on September 30, 2019 Shares issued for cash on March 31, 2020 Number of common shares issued and outstanding at December 31, 2020 A 2-for-1 stock split of Pearl's common stock took place on March 31, 2021 1,920,000 192,000 2,060,000 4,172,000 Your answer is correct. Compute the weighted average number of common shares used in computing earnings per common share for 2019 on the 2020 comparative income statement. 2112000 shares SHOW SOLUTION SHOW ANSWER LINK TO TEXT Your answer is correct. Compute the weighted average number of common shares used in computing earnings per common share for 2020 on the 2020 comparative income statement. 3657000 Shares SHOW SOLUTION SHOW ANSWER LINK TO TEXT

Answer 1

Weighted average number of common shares for 2021 = 4172000 x 2 = 8344000

Stock split is considered for beginning balance of shares as well, since value of shares remains same