The Reserve Company had 606 million shares of $10 par common stock outstanding J

Question

The Reserve Company had 606 million shares of $10 par common stock outstanding January 1, 2012. The following activities affected common shares during the year: 2012: Feb 27- purchase 18 million shares of treasury stock at $30/share Oct. 30- sold the treasury stock for $35/share Nove 29-issued 72 million new shares at $36/share Dec 31- net income is 1,200,000 2013: jan 14- declared and issued a 2 for 1 stock split dec 31-net income is 1,200,000 A) RECORD THE 2012 AND 2013 STOCKHOLDERS EQUITY TRANSACTIONS B) DETERMINE THE 2012 EPS C) DETERMINE THE 2013 EPS D) WHAT WHAT AMOUNT WILL THE 2012 EPS BE PRESENTED IN THE 2013 COMPARATIVE FINANCIAL STATEMENT?

Explanation / Answer

jan2012- 606million shares of 10$ =6060million$ Feb 27- buy 18million shares of 30$=540million$ oct 30- sold 18 million at 35$=630million $ nov 29- sold 72 million at 36$=2592 million $ dec 31-net income=1.2million $ jan 14-declared 2 for 1 stock split dec 31=net income=1.2 million b)eps of 2012=(90+1.2)/(606+72)=0.134$ c)eps of 2013=1.2/(606+72)=0.0018$

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