QUESTION 8-WEIGHTED AVERAGE and EARNINGS PER SHARE On January 1 2017, Rego Watch
ID: 2593825 • Letter: Q
Question
QUESTION 8-WEIGHTED AVERAGE and EARNINGS PER SHARE On January 1 2017, Rego Watches Inc. had 200,000 common shares outstanding. On February 1 2017 Rego Watches Inc. issued an additional 30,000 common shares. On June 1, another 90,000 common shares were issued. Rego Watches Inc. had net income for the year in the amount of $350,000 and they paid $35,000 in dividends to preferred shareholders Required: Calculate the company's weighted average number of shares. Round your answer to the nearest whole share. Also calculate the company's basis Earnings Per Share (EPS) Time Period Shares Outstanding Fraction of Year Weighted Average Shares o/s Basic EPS:Explanation / Answer
1.
For calculation of weighted average we will calculate how much shares are there for the year like if the shares are issued in Feb 1 then they here for 11 months.
Time
Shares outstanding
Fraction of the year
Weighted average
Jan 1
200,000
12/12 months
200,000
Feb 1
30,000
11/12 months
27,500
June 1
90,000
7/12 months
52,500
Total
280,000
Weighted average shares outstanding = 280,000 Shares
2.
Basic EPS = (Net income – Preference dividend) / Weighted average shares outstanding
= (350,000 – 35,000) / 280,000
Basic EPS = $1.125 per share
Time
Shares outstanding
Fraction of the year
Weighted average
Jan 1
200,000
12/12 months
200,000
Feb 1
30,000
11/12 months
27,500
June 1
90,000
7/12 months
52,500
Total
280,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.