Required: Compute Barstow\'s basic earnings per share for the year ended Decembe

Question

Required: Compute Barstow's basic earnings per share for the year ended December 31, 2015.

Problem #4 Information from the financial statements of Barstow Industries included the following at December 31, 2014: Common shares outstanding, $1 par $625,000 8%, noncumulative, non-convertible preferred stock $300,000 During 2015, Barstow had the following stock transactions: Feb. 28 60,000 common shares sold May 15 4% common stock dividend declared and issued Jul 01 3,000 shares repurchased to be held in Treasury Stock, already adjusted for stock dividend Dec. 31 $2,200,000 net income for the year 40% income tax rate

Explanation / Answer

date Issues/Retired No.of Outstanding Shares After Stock dividend. of shares outsnading No.of Months held Weighted average shares 1-Jan 625000 650000 2/12 months 108333.3 28-Feb 60000 685000 712400 4/12 months 237466.7 1-Jul -3000 682000 709280 6/12 month 354640 Total 700440 Note stock dividend 4% has effect from the start of the year Ans a Basic EPS=Net Income-Preferred Dividend/Weighted averga no.of common stockholder 2200000-24000/700400 0.27984 0.28 Ans

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