Question

For the year ended December 31, 2021, Norstar Industries reported net income of $655,000.

Answer 1

Answer:

Earnings per share = $0.64

Explanation:

To calculate the Earnings per share, we first need to compute weighted average number of shares:

Jan.1: 900,000 * (12/12) = 900,000 * 1.05               =     945,000

Apr.30: 60,000 * (8/12) = 40,000 * 1.05                  =       42,000

Jun.1: 72,000 * (7/12)                                                 =       42,000

Weighted Average No. of Shares Outstanding      =     1,029,000

Note: We multiplied by 1.05 factors on Jan.1 and Apr.30 to account for 5% declared and distribution of a stock dividend.

Earnings Per Share =                           Net Income                                

                                    Weighted Average No.of Shares Outstanding

Earnings Per Share =  655,000

                                    1,029,000

Earnings Per Share = $0.64