Question

2.	For the year ended December 31, 2006, Norstar Industries reported net income of
	$655,000. At January 1, 2006, the company had 900,000 common shares
	outstanding. The following changes occurred during 2006:
	Apr. 30 - sold or issued 60,000 shares in a public offering
	May 24 - Declared and distributed a 5% stock dividend.
	June 1 - sold and issued an additional 72,000 shares
	Determine the earnings per share.
	(check figure: eps = 0.64)

Answer 1

Earnings per share = Net income / outstanding common shares

Outstanding common shares

Beginning shares	900,000
Issued on Apr 30 (60,000*8/12)	40,000
Stock dividend (900,000+60,000)*5%	48,000
Issued on June 1 (72,000 * 7/12)	42,000
Total outstanding common shares	1,030,000

Eps = 655,000/1,030,000

= 0.64 per share