Question

Marian Company's net income is $200,000; between January 1 and June 30, the company had 450,000 shares outstanding. On July 1, the company reacquired 100,000 shares. Assuming no other stock transactions occurred, Marian will report basic EPS of:

Answer 1

Answer:

$.5

Explanation:

Net Income     $200,000

Shares outstanding from Jan 1-June 30  450,000*6/12=225,000

Shares outstanding from Jul 1-December 31  (450,000-100,000)*6/12=175,000

Weighted average shares outstanding                   (225,000+175,000)=400,000

Basic EPS=Net income-preferred stocks dividend (if any)/Weighted Average shares outstanding=$200,000/400,000=$.5