question archive Cullumber Corporation had 102,000 common shares outstanding on December 31, 2019
Cullumber Corporation had 102,000 common shares outstanding on December 31, 2019
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Cullumber Corporation had 102,000 common shares outstanding on December 31, 2019. During 2020, the company issued 12,000 shares on March 1, retired 6,800 shares on July 1, issued a 20% stock dividend on October 1, and issued 18,300 shares on December 1. For 2020, the company reported net income of $408,000 after a loss from discontinued operations of $64,000 (net of tax). The company issued a 2-for-1 stock split on February 1, 2021, and the company’s financial statements for the year ended December 31, 2020, were issued on February 28, 2021.
Calculate earnings per share for 2020 as it should be reported to shareholders. (Round answer to 2 decimal places, e.g. 15.75.)
| Earnings per share | ||
|---|---|---|
|
Income per share before discontinued operations |
$enter a dollar amount | |
|
Discontinued operations loss per share, net of tax |
$enter a dollar amount | |
|
Net income per share |
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Answer:
| Finding the number of outstanding shares for Dec 31 ,2020 | |||||
| Details | Number of shares | Weight of Period | Weighted no of shares | Total no of Outstanding shares | Remarks |
| Commom shares outstanding on Dec 31,2019 | 102000 | 1 | 102000 | 102000 | |
| Add March 1 issue of shares | 12000 | =10/12 | 10000 | 112000 | |
| Less : July 1 retiring of shares | (6800) | 0.50 | (3400) | 108600 | |
| Oct 1 Issue of Stock dividends 20% | 21720 | 1 | 21720 | 130320 | no time weight for shares issued free of consideration, considered effective from start of previous periods |
| Dec 1. issue of shares | 18300 | =1/12 | 1525 | 131845 | |
| 2 for 1 stock split done on Feb 28 2021 | 263690 | 2-for -1 split done on Feb 28,2021 but needs to be considered as if happened during the end of prior period as the shares are without consideration and financial statement not published by Feb 28,20121 | |||
| So total no of Common shares outstanding as on Dec 31 ,2020 for EPS calculation =263690 |
| EPS Calculation | |
| Total Outstanding common shares as on Dec 31,2020 | 263690 |
| Net Income before loss from discountinued operation | $ 472000 |
| EPS before loss from discountinued operation | $ 1.79 |
| After tax Income/(Loss) From Discontnued Operation | (64000) |
| Loss per share from discontinued Operation | $ (0.24) |
| Net Income per share =$1.79-$0.24= | $ 1.55 |
