Thanks in Advance :) Trinity Railway began 20X5 with 900,000 shares of common st

Question

Thanks in Advance :)

Trinity Railway began 20X5 with 900,000 shares of common stock outstanding. On March 1, 20X5, Trinity Railway issued 300,000 additional shares of common stock. 50,000 shares of common stock were reacquired on October 1. Trinity Railway reported net income of $2,275,000 for the year ending December 31, 20X5. Trinity Railway paid $250,000 in common dividends during 20X5.
(a) Calculate the weighted-average common shares outstanding for 20X5.
(b) Calculate basic earnings per share for 20X5.
            

Explanation / Answer

(a) Calculation of weighted average common shares

(b). Net income = $2275000

Basic EPS = Net income before dividened/Weighted average common shares

= 2275000 /1137500

= 2

Opening balance 900000 Add: Shares issued (300000 x 10/12) 250000 Less: Shares reacquired (50000 x 3/12) 12500 Weighted average common shares 1137500

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