On January 1, 2014, Jake Corporation had 2,000,000 shares of common stock outsta

Question

On January 1, 2014, Jake Corporation had 2,000,000 shares of common stock outstanding. On March 1, the corporation issued 350,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 3-for-1 stock split. On October 1, the corporation purchased on the market 700,000 of its own outstanding shares and retired them. Net income is $2,500,000 and preferred stock 50,000 shares outstanding, $100 par 8% cumulative Instructions Compute the weighted average number of shares to be used in computing earnings per share for 2015.

Explanation / Answer

Increase Months (Decrease) Outstanding Outstanding Shre months 1-Jan 0 2,000,000 2 1-Feb 8,000,000 1-Mar 350,000 2,350,000 4 1-Feb 18,800,000 1-Jul 2,350,000 7,050,000 3 21,150,000 1-Oct -700,000 6,350,000 12 47,950,000 3,995,833 4795000/12

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