Gogean Inc. uses a calendar year for financial reporting. The company is authori
ID: 2387301 • Letter: G
Question
Gogean Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $10 par common stock. At no time has Gogean issued any potentially dilutive securities. Listed below is a summary of Gogean's common stock activities.1. Number of common shares issued and outstanding at December 31, 2011 2,400,000
2. Shares issued as a result of a 10% stock dividend on September 30, 2012 240,000
3. Shares issued for cash on March 31, 2013
2,000,000
Number of common shares issued and outstanding at December31, 2013
4,640,000
4. A 2-for-1 stock split of Gogean's common stock took place on March 31, 2014
(a) Compute the weighted average number of common shares used in computing earnings per common share for 2012 on the 2013 comparative income statement.
shares
(b) Compute the weighted average number of common shares used in computing earnings per common share for 2013 on the 2013 comparative income statement.
shares
(c) Compute the weighted average number of common shares to be used in computing earnings per common share for 2013 on the 2014 comparative income statement.
shares
(d) Compute the weighted average number of common shares to be used in computing earnings per common share for 2014 on the 2014 comparative income statement.
shares
Explanation / Answer
(a) 2012 on 2013 income statement For the period 1.1.12 -31.12.12 =2400000/12*12 2,400,000 For the period 1.10.12 - 31.12.12 = 240000/12*3 60,000 Weighted avergage number of shares 2,460,000 (b) 2013 on 2013 income statement Opening shares 2,640,000 2,640,000 Add: issued during the year =2000000*9/12 1,500,000 Weighted avergage number of shares 4,140,000 ( c) 2013 on 2014 income statement Weighted avergae number of equity shares will double due to stock split = 4140000*2 8,280,000 (d) 2014 on 2014 income statement Opening shares = 46,40,000 Stock Split =4640000*2 Weighted avergae number of equity shares will double due to stock split 9,280,000
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