Exercise 16-15 Marigold Inc. uses a calendar year for financial reporting. The c

Question

Exercise 16-15 Marigold Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,680,000 shares of $10 par common stock. At no time has Marigold issued any potentially dilutive securities. Listed below is a summary of Marigold's common stock activities. 1. Number of common shares issued and outstanding at December 31, 20152,160,000 216,000 1,810,000 4,186,000 2. Shares issued as a result of a 10% stock dividend on September 30, 2016 3 Shares issued for cash on March 31, 2017 Number of common shares issued and outstanding at December 31, 2017 A 2-for-1 stock split of Marigold's common stock took place on March 31, 2018 4. Compute the weighted-average number of common shares used in computing earnings per common share for 2016 on the 2017 comparative income statement shares Compute the weighted-average number of common shares used in computing earnings per common share for 2017 on the 2017 comparative income statement. shares Compute the weighted-average number of common shares to be used in computing earnings per common share for 2017 on the 2018 comparative income statement. shares Compute the weighted-average number of common shares to be used in computing earnings per common share for 2018 on the 2018 comparative income statement. shares Question Attempts: 0 of 2 used

Explanation / Answer

1. for 2016 :

jan1 2016 to 30 sept 2016 (2160000*9/12) = 1620000

retroactive adjustment for stock dividend x 1.10

jan 2016 - 30 sept, as adjusted = 1782000

oct 1 - 31 dec 2016 [(2160000+216000)*3/12] = 594000

2376000

weighted average number of common shares for 2016 = 2376000 shares

2. for 2017:

jan 2017 - 31mar 2017 (2376000*3/12) = 594000

apr 2017 - dec 2017 (4186000*9/12) = 3139500 3733500

weighted average number of common shares for 2017 = 3733500 shares

3. for 2017 on 2018 comparative income statement:

2017 weighted average number of shares previously computed 3733500

retroactive adjustment for stock split x 2 7467000

  weighted average number of common shares for 2017 on 2018 comparative income statement: 7467000 shares

4. for 2018:

jan 1 2018 - 31 mar 2018 (4186000*3/12) 1046500

retroactive adjustment for stock split x 2

jan 2018 - mar 2018, as adjusted 2093000

april 2018 - dec 2018 [(4186000*2)*9/12] 6279000 8372000

weighted average number of common shares for 2018 8372000 shares.

  

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