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9 October, 02:42

The Alford Group had 260,000 shares of common stock outstanding at January 1, 2021. The following activities affected common shares during the year. There are no potential common shares outstanding. 2021 Feb. 28 Purchased 6,000 shares of treasury stock. Oct. 31 Sold the treasury shares purchased on February 28. Nov. 30 Issued 24,000 new shares. Dec. 31 Net income for 2021 is $1,419,000. 2022 Jan. 15 Declared and issued a 2-for-1 stock split. Dec. 31 Net income for 2022 is $1,419,000. Required: 1. Determine the 2021 EPS. (Do not round intermediate calculations.) 2. Determine the 2022 EPS. 3. At what amount will the 2021 EPS be presented in the 2022 comparative financial statements

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Answers (2)
  1. 9 October, 03:21
    0
    1. EPS 2021 = net icome / no of shares = $1,419,000 / 284000 = 4.99 = 5

    2. EPS 2022 = $1,419,000 / 852000 = 1.67 = 2

    3. EPS will be shown as $5

    Explanation:

    Number of shares = 260000

    issued shares = 24000

    shares at the end 2021 = 284000

    New issue 284 000*2/1 = 568000

    shares at the end 2022 = 852000
  2. 9 October, 06:33
    0
    EPS 2021 $5.5

    EPS 2022 $2.4982

    We will compare by dividing by 2 as we make a stock split

    5.5 / 2 =

    EPS 2021 in the 2022 income statement $2.75

    Explanation:

    We have to calcualte the weighted average shares outstandings

    260,000 beginning

    - 6,000 x 10/12 (February through December)

    + 6,000 x 2/12 (Nov and Dec)

    +24,000 x 1/12

    258,000 weighted average shares

    EPS = net income / outstanding shares

    income 1,419,000 / 258,000 = 5.50

    2.1 stock split therefore

    284,000 shares beginning x 2 = 568,000 shares

    EPS 1,419,000 / 568,000 = 2,4982 EPS
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Home » Business » The Alford Group had 260,000 shares of common stock outstanding at January 1, 2021. The following activities affected common shares during the year. There are no potential common shares outstanding. 2021 Feb.
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