Takehome portion: Assume XYZ uses a calendar year for financial reporting. The c
ID: 2335003 • Letter: T
Question
Takehome portion:
Assume XYZ uses a calendar year for financial reporting. The company is authorized to issue 32,500,000 shares of $1 par common stock. Listed below is a summary of XYZ’s common stock activities.
2,600,000
780,000
1,625,000
5,005,000
1-Number of common shares issued and outstanding at December 31, 2014
2-Shares issued as a result of a 30% stock dividend on Sept. 1, 2015
3-Shares issued for cash on June 30, 2016
Number of common shares issued and outstanding at December 31, 2016
4-A 2-for-1 stock split of XYZ’s common stock took place on Oct. 1, 2017
Instructions:
A)Compute the weighted average number of common shares to be used in computing earnings per common share for 2015 on the 2016 comparative income statement.
B) Compute the weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2016 comparative income statement.
Compute the weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2017 comparative income statement.
Compute the weighted average number of common shares to be used in computing earnings per common share for 2017 on the 2017 comparative income statement.
2,600,000
780,000
1,625,000
5,005,000
Explanation / Answer
a Compute the weighted average number of common shares to be used in computing earnings per common share for 2015 on the 2016 comparative income statement Jan 1, 2015 to Dec 31, 2015 2600000 (2600000*8)/12 Adjustment for stock dividend 130% Jan 1, 2015 to Dec 31, 2015, after adjustment 3380000 Weighted Average shares outstanding 3380000 b Compute the weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2016 comparative income statement Jan 1, 2016 - May 31, 2016 1408333.3 (3380000*5/12) Jun 1, 2016 - Dec 31, 2016 947916.67 (1625000*7/12) Weighted Average shares outstanding 2356250 c Compute the weighted average number of common shares to be used in computing earnings per common share for 2016 on the 2017 comparative income statement 2016 weighted average number of shares 2356250 Adjustment for stock split 2 Weighted Average shares outstanding 4712500 d Compute the weighted average number of common shares to be used in computing earnings per common share for 2017 on the 2017 comparative income statement Jan 1, 2017 to Sept 30, 2017 947916.67 Adjustment for stock split 2 Jan 1, 2016 to Sept 30, 2016, as adjusted 1895833.33 9 Oct 1, 2017 to Dec 31, 2017 631944.44 Weighted Average shares outstanding 2527777.78 12
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