Assuming XYZ uses a calendar year for financial reporting. The company is author

Question

Assuming XYZ uses a calendar year for financial reporting. The company is authorized to issue 8,000,000 shares of $10 par common stock. Listed below is summary of XYZ's stock activities.

1. Numbers of Shares issued and outstanding at Dec 31, 2012 = 6,000,000

2. Shares issued as a result of a 25% stock dividend on Sept 1, 2013 = 1,500,000

3. Shares issued for cash on May 1, 2014 = 4,000,00 Number of shares issued and outstanding on Dec 31, 2014 = 11,500,000

4. A 6-1 stock split of XYZ's common stock took place on June, 30 2015

a. Compute the weighted average number of common shares used in computing earnings per common share for 2013 and on the 2014 comparative income statement.

b. Compute the weighted average number of common shares used in computing earnings per common share for 2014 and on the 2014 comparative income statement.

c. Compute the weighted average number of common shares used in computing earnings per common share for 2014 and on the 2015 comparative income statement.

d. Compute the weighted average number of common shares used in computing earnings per common share for 2015 and on the 2015 comparative income statement.

Explanation / Answer

(a)   Dates Shares Fraction Weighted Shares Outstanding 01/01/2013 60,00,000 0.67 40,20,000 25% Stock Dividend 10,05,000 Issued Shares 01/09/2013 15,00,000 75,00,000 0.33 24,75,000 Weighted Average Outstanding Shares = 75,00,000

(b)

(b)   Dates     Shares      Fraction     Weighted   Shares Outstanding 01/01/2014 75,00,000 0.33 24,75,000 Issued Shares 01/05/2014 40,00,000 115,00,000 0.67 77,05,000 WeightedAverage Outstanding Shares = 101,80,000

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