Answer:
a. $7 per share
b. $2.29 per share
c. $3.5
Explanation:
a. The computation of 2021 earning per share is given below:-
EPS = Net income ÷ Weighted Average Outstanding shares of common stock
Weighted Average Outstanding shares of common stock for 2021
= (230,000 × 12 ÷ 12) - (27,000 × 10 ÷ 12) + (27,000 × 2 ÷ 12) + (108,000 × 1 ÷ 12)
= 230,000 - 22,500 + 4,500 + 9,000
= 221,000
EPS for 2021 = Net income ÷ Weighted Average Outstanding shares of common stock for 2021
= $1,547,000 ÷ 221,000
= $7 per share
b. The computation of 2022 earning per share is given below:-
Shares of common stock at the beginning of 2022 = 230,000 - 27,000 + 27,000 + 108,000
= 338,000
Weighted average outstanding shares for 2022 = 338,000 × Stock split
= 338,000 × 2
= $676,000
EPS for 2022 = Net income ÷ Weighted Average Outstanding shares of common stock for 2022
= $1,547,000 ÷ $676,000
= $2.29 per share
c. The computation of 2021 EPS be presented in the 2022 comparative financial statements is shown below:-
2021 EPS be presented in the 2022 comparative financial statements = Net income ÷ (Weighted Average Outstanding shares of common stock for 2016 × Stock split)
= $1,547,000 ÷ (221,000 × 2)
= $1,547,000 ÷ 442,000
= $3.5
