Question

On December 31, 2012, Albacore Company had 300,000 shares of common stock issued and outstanding. Albacore issued a 10% stock dividend on June 30, 2013. On September 30, 2013, 12,000 shares of common stock were reacquired as treasury stock.
What is the appropriate number of shares to be used in the basic earnings per share computation for 2013?A. 303,000.B. 342,000.C. 312,000.D. 327,000.

Answer 1

Answer:

Option (D) 327,000

Explanation:

Data provided in the question:

Shares of common stock issued and outstanding = 300,000

Stock dividend issued = 10%

Shares of common stock reacquired as treasury stock = 12,000

Duration from June 30, 2013 to September 30, 2013 = 3 months

= 0.25 years

Now,

Appropriate number of shares to be used in the basic earnings per share computation for 2013 will be

= [ 300,000 × ( 1 + 0.10 ) ] - [ 12,000 × 0.25 ]

= 330,000 - 3,000

= 327,000

Hence,

Option (D) 327,000