_____5. Jasper Corp, has the following Stockholders’ Equity account balances and activity for Year 2. Net...
_____5. Jasper Corp, has the following Stockholders’ Equity account balances and activity for Year 2.
|
Net income |
$12,700,000 |
|||
|
Retained earnings |
$15,250,000 |
|||
|
Preferred stock shares outstanding |
1,000 |
|||
|
Common stock shares outstanding at January 1, Year 2 |
7,255,000 |
|||
|
Additional Common shares issued at July 1, Year 2 |
20,000 |
|||
|
3-for-1 stock split at December 31, Year 2 |
||||
|
Preferred Dividends |
$10,000 |
|||
|
Common Dividends |
$62,000 |
|||
|
Year 1 EPS |
$2.56 |
|||
Earnings per share = __________________ / ___________________* = ________
* Compute Denominator: Weighted average common shares outstanding
|
Date |
Shares |
Portion of year |
Weighted Average Shares |
|
January 1, Y2 |
7,255,000 |
||
|
July 1, Y2 |
|||
|
Weighted Average December 31 before split |
|||
|
Stock split 3-for-1 |
|||
|
*Total Weighted Average, 12/31/Y2 |
|||
|
Note: Year 1 restated |
$2.56 / 3 =_____ |
Did performance improve in Year 2 as compared to Year 1? _________________Why?
Homework Answers
Solution :
| Date | Shares | Portion of year | Weighted Average Shares |
| January 1, Y2 | 7255000 | 6/12 | 3627500 |
| July 1, Y2 | 7275000 | 6/12 | 3637500 |
| Weighted Average December 31 before split | 7265000 | ||
| Stock split 3-for-1 | 3 | ||
| *Total Weighted Average, 12/31/Y2 | 21795000 | ||
| Note: Year 1 restated | $2.56 / 3 = $0.85 |
Earning per share = (Net income - Preferred dividends) / Weighted average outstanding shares
= ($12,700,000 - $10,000) / 21795000 = $0.58 per share
No, performance in not improved in year 2 as compared to year 1 as earning per share of year 2 is decreasing even after restatement.
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