Exercise 16-17 Culver Company had 186,000 shares of common stock outstanding on

Question

Exercise 16-17 Culver Company had 186,000 shares of common stock outstanding on December 31, 2018. During the year 2019, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2019, Culver Company reported net income of $228,900 after a loss from discontinued operations of $39,200 (net of tax) What earnings per share data should be reported at the bottom of its income statement? (Round answers to 2 decimal places, e.g. $2.55.) Culver Company Income Statement

Explanation / Answer

Solution:

Weighted avearge outstanding shares:

Outstanding shares from 01.01.2019 to 30.04.2019 = 186000 shares

Outstanding shares from 01.05.2019 to 31.10.2019 = 186000 + 8000 = 194000 shares

Outstanding shares from 01.11.2019 to 31.12.2019 = 194000 - 14000 = 180000 shares

Weighted average outstanding shares = (186000*4/12) + (194000 * 6 /12) + (180000 * 2/12) = 189000 shares

Net income = $228,900

Loss from discontinuing operation = $39,200

Income from continuing operation = $228,900 + $39,200 = $268,100

Earning per share (Overall) = Earninn available from equity share holder / Weighted average outstanding shares

= $228,900 / 189000 = $1.21 per share

Earning per share (Continuing operation) = $268,100 / 189000 = $1.42 per share

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