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Stellar Inc. presented the following data. Net income Preferred stock: 54,000 shares outstanding, $100 par, 8% cumulative, no16.2 #1 PLEASE SHOW ALL WORK

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Answer #1

The earnings per share indicates how much the company is making money for single share. This is expressed in dollar terms per share.

Restatement in the given column indicates the impact of share split which is 2 that means 2 shares were issued for every share held. Although this happened on Oct 1, the impact needs to be taken from the beginning.

a

b

c

a X b X c

Dates
Outstanding

Shares
outstanding

Restatement

Fraction of
year

Weighted
Shares

Beginning balance

Jan 1- May 1

712800

2

0.33 (4/12)

475,200

Issue shares

May 1 - Aug 1

985200

2

0.25

(3/12)

492,600

treasury shares bought

Aug 1- Oct 1

836400

2

0.16667

(2/12)

278,800

Split

Oct 1- Dec 31

1672800

1

0.25000

(3/12)

418,200

Weighted Average Shares Outstanding

1246,600

Net income

$     2,670,000

Preferred stock dividend
(5400,000 X 8%)

$      (432,000)

Adjusted net income

$     2,238,000

Net income attributable to common stock (A)

$     2,238,000

Weighted Average Shares Outstanding (B)

1,246,600

EPS (1.795 rounded to 1.8)

$         1.8
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