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The Alford Group had 170,000 shares of common stock outstanding at January 1, 2021
The Alford Group had 170,000 shares of common stock outstanding at January 1, 2021. The following activities affected common shares during the year. There are no potential common shares outstanding. 2021 Feb. 28 Purchased 9,000 shares of treasury stock. Oct. 31 Sold the treasury shares purchased on February 28. Nov. 30 Issued 36,000 new shares. Dec. 31 Net income for 2021 is $1,670,000. 2022 Jan. 15 Declared and issued a 2-for-1 stock split. Dec. 31 Net income for 2022 is $1,670,000. Required: 1. Determine the 2021 EPS. (Do not round intermediate calculations.) 2. Determine the 2022 EPS. 3. At what amount will the 2021 EPS be presented in the 2022 comparative financial statements? (For all requirements, Enter your answers in thousands.) Answer is complete but not entirely correct. Numerator Denominator Earnings per Share 10.00 4.05 1. $ 167.000 x = IS 2. $ 1,670,000 X 1 1,670,000 X/ 1,670,000 X 1 412.000 x = $ 3. $ 373,000 X S 4.48
Expert Solution
SOLUTION:
Computation of weighted average number of shares outstanding :
| 1/1 - 12/31 | 170,000 x ( 12 / 12 ) | 170,000 |
| 2/28 - 12/31 | 9,000 x ( 10/12 ) | (7,500) |
| 10/31-12/31 | 9,000 x ( 2 / 12 ) | 1,500 |
| 11/30-12/31 | 36,000 x ( 1/12 ) | 3,000 |
| Weighted Average No. of Shares Outstanding for 2021 | 167,000 |
Weighted average number of shares for 2022 = (170,000 - 9,000 + 9,000 + 36,000) x 2 = 412000
YOUR ANSWERS ARE CORECT. ONLY THING IS THAT IT NOT WRITTEN IN THOUSANDS.
FOR ALL REQUIREMENTS, ENTER YOUR ANSWERES IN THOUSANDS
| Numerator | Denominator | Earnings per share | |||
| 1. | $ 1,670 | / | 167 | = | $ 10.00 |
| 2. | $ 1,670 | / | 412 | = | $ 4.05 |
Presentation in Comparative Financial Statements:
2021 EPS : $ 5.00
2022 EPS : $ 4.05
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