Question

On January 1, 2016, Albacore Company had 300,000 shares of its common stock issued and outstanding. Albacore issued a 10% stock dividend on July 1, 2016. On October 1, 2016, Albacore retired 12,000 of its common shares. When calculating basic earnings per share for 2016, what is the appropriate number of shares for Albacore to use in the denominator of the EPS fraction?
A. 341,350.B. 322,210.C. 344,100.D. 346,850

Answer 1

Answer:

None of the option is correct as the appropriate no of shares are 327000.

Explanation:

As,

The Albacore Company is having 300000 Shares.

On July 1, 2016 10% more dividend is issued.

And Retired 12000 Shares

Thus, as per EPS Fraction the appropriate no of shares are

= 300000 + (300000 × 10%) - 12000 × 1/4

= 327000