(a) Compute the weighted average number of common shares used in computing earni
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Question
(a) Compute the weighted average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement.
(b) Compute the weighted average number of common shares used in computing earnings per common share for 2014 on the 2014 comparative income statement.
(c) Compute the weighted average number of common shares to be used in computing earnings per common share for 2014 on the 2015 comparative income statement.
(d) Compute the weighted average number of common shares to be used in computing earnings per common share for 2015 on the 2015 comparative income statement.
Problem 2 (Weighted-Average Number of Shares 6 points) Assuming XYZ uses a calendar year for financial reporting. The company is authorized to issue 8,000,000 shares of $10 par common stock. Listed below is a summary of XYZ's common stock activities: 1. Number of common shares issued andoutstanding at December 31, 2012 6,000,000 1,500,000 4,000,000 Number of common shares issued and outstanding at December 31, 2014 11.500,000 2. Shares issued as a result of a 25% stock dividend on September 1, 2013 3. Shares issued for cash on May 1, 2014 4. A 6-for-1 stock split of XYZ's common stock took place on June 30, 2015Explanation / Answer
(a)
Calculation of weighted average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2012
6,000,000
12
6,000,000
Stock Dividend issued on Sept. 1, 2013
1,500,000
4
500,000
Weighted average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement:
6,500,000
(b)
Calculation of weighted average number of common shares used in computing earnings per common share for 2014 on the 2014 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2013
7,500,000
12
7,500,000
(6,000,000 +1,500,000)
Shares issued on May. 1, 2014
4,000,000
8
2,666,667
Weighted average number of common shares used in computing earnings per common share for 2014 on the 2014 comparative income statement:
10,166,667
(c)
Calculation of weighted average number of common shares used in computing earnings per common share for 2014 on the 2015 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2013
7,500,000
12
7,500,000
(6,000,000 +1,500,000)
Shares issued on May. 1, 2014
4,000,000
8
2,666,667
Weighted average number of common shares used in computing earnings per common share for 2014 on the 2015 comparative income statement:
10,166,667
(d)
Calculation of weighted average number of common shares used in computing earnings per common share for 2015 on the 2015 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2014
11,500,000
(7,500,000 +4,000,000)
Stock Split 6 for 1
69,000,000
12
69,000,000
(11,500,000 *6)
Weighted average number of common shares used in computing earnings per common share for 2015 on the 2015 comparative income statement:
69,000,000
(a)
Calculation of weighted average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2012
6,000,000
12
6,000,000
Stock Dividend issued on Sept. 1, 2013
1,500,000
4
500,000
Weighted average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement:
6,500,000
(b)
Calculation of weighted average number of common shares used in computing earnings per common share for 2014 on the 2014 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2013
7,500,000
12
7,500,000
(6,000,000 +1,500,000)
Shares issued on May. 1, 2014
4,000,000
8
2,666,667
Weighted average number of common shares used in computing earnings per common share for 2014 on the 2014 comparative income statement:
10,166,667
(c)
Calculation of weighted average number of common shares used in computing earnings per common share for 2014 on the 2015 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2013
7,500,000
12
7,500,000
(6,000,000 +1,500,000)
Shares issued on May. 1, 2014
4,000,000
8
2,666,667
Weighted average number of common shares used in computing earnings per common share for 2014 on the 2015 comparative income statement:
10,166,667
(d)
Calculation of weighted average number of common shares used in computing earnings per common share for 2015 on the 2015 comparative income statement:
Number of shares
Outstanding Period during the year (Months)
Weighted Average Shares
A
B
A*B/12
Shares Outstanding at Dec. 31, 2014
11,500,000
(7,500,000 +4,000,000)
Stock Split 6 for 1
69,000,000
12
69,000,000
(11,500,000 *6)
Weighted average number of common shares used in computing earnings per common share for 2015 on the 2015 comparative income statement:
69,000,000
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