Question

Marigold Inc. uses a calendar year for financial reporting The compawis authorized to securities. Listed below is a summary of Marigold's common stock activities 0000 shares of $12 par common stock no me has Marigold issued any otv 1. 2. 3. Number of common shares i n and outstanding December 31, 2015 Shares and as a result of 12 stk vided on September , 2016 Shares sued for cash on March 31, 2017 Number of common share issued and in December 31, 2017 A-for-1 stockpit of Marigold's common stock took place on March 31, 2018 2.090.000 250.800 2,170,000 4.510.00 4 Compute the weighted average number of common shares used in computing earnings per common share for 2016 on the 2017 martie income watement shares LINE TO TY umber of common chewed in computing camnings common share for 2017 on the 2017 comparative income watament Compute the w a verage of common shares the coming ang

Answer 1

Solution A:

Weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2017 comparative income statement =

Outstanding shares at beginning of 2016 restated with stock dividend regardless of where in the year the stock dividends occurs

= 2090000*112% = 2340800 shares

Solution B:

Weighted average number of common shares to be used in computing earnings per common share for 2017 on the 2017 comparative income statement:

Outstanding shares at beginning of 2017 + Weighted average nos of shares issued during the year

= 2340800 + 2170000*9/12 = 3968300 shares

Solution C:

Weighted average number of common shares to be used in computing earnings per common share for 2017 on the 2018 comparative income statement.

= 2017 weighted average nos of share outstanding * retrospective adjustment of stock split

= 3968300 * 2 = 7936600 shares

Solution D:

Weighted average number of common shares to be used in computing earnings per common share for 2018 on the 2018 comparative income statement:

Nos of outstanding shares at beginning of 2018 * retrospective adjustment of stock split

= 4510800*2 = 9021600 shares