The 2015 balance sheet for Guthrie Corporation revealed the following informatio
ID: 2468272 • Letter: T
Question
The 2015 balance sheet for Guthrie Corporation revealed the following information:
Common stock, $10 par, 50,000 shares issued and outstanding
Preferred stock, $100 par, 6%, cumulative stock, 1,000 shares issued and outstanding
During 2016, Guthrie reported net income of $225,000 and engaged in the following stock transactions:
Sept 1 Declared and issued a 50% stock dividend on common stock.
2. Calculate the weighted average number of shares of stock that should be used to calculate EPS for the 2016 income statement. Round your answer to the nearest whole number.
3. Compute the basic EPS that would be disclosed by Guthrie. Round your answer to 2 decimal places.
Mar. 1 Issued 10,000 shares of common stock for cash. Apr. 1 Reacquired 2,000 shares of common stock as treasury stock. Aug. 1 Resold 1,000 shares of treasury stock for cash.Sept 1 Declared and issued a 50% stock dividend on common stock.
2. Calculate the weighted average number of shares of stock that should be used to calculate EPS for the 2016 income statement. Round your answer to the nearest whole number.
3. Compute the basic EPS that would be disclosed by Guthrie. Round your answer to 2 decimal places.
Explanation / Answer
Calculate the weighted average number of shares of stock that should be used to calculate EPS for the 2016 income statement:
Details
Common stock @$10
50000
Outstanding preferred stock @$100
1000
Add: Mar 1 - Issue of new common stock shares
10000
Less: Apr -1 - Reacquired of common stock shares
2000
Add: Aug -1 - resold shares
1000
Total number of common stock shares
59000
Compute the basic EPS that would be disclosed by Guthrie:
Details
Amount
Total number of common stock shares
59,000.00
Dividend
$ 112,500.00
EPS (112500/59000)
$ 1.91
Therefore, EPS is $1.91 for common stock.
Details
Common stock @$10
50000
Outstanding preferred stock @$100
1000
Add: Mar 1 - Issue of new common stock shares
10000
Less: Apr -1 - Reacquired of common stock shares
2000
Add: Aug -1 - resold shares
1000
Total number of common stock shares
59000
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