Agassi’s capital structure consists of preferred stock and common stock. The com
ID: 2417794 • Letter: A
Question
Agassi’s capital structure consists of preferred stock and common stock. The company has not issued any convertible securities or warrants and there are no outstanding stock options. Agassi issued 49,400 shares of $100 par value, 6% cumulative preferred stock in 2011. All of this stock is outstanding, and no preferred dividends are in arrears. There were 1,369,200 shares of $1 par common stock outstanding on June 1, 2013. On September 1, 2013, Agassi sold an additional 459,600 shares of the common stock at $17 per share. Agassi distributed a 20% stock dividend on the common shares outstanding on December 1, 2014. These were the only common stock transactions during the past 2 fiscal years. Determine the weighted-average number of common shares that would be used in computing earnings per share on the current comparative income statement for:
Weighted-average number of common shares
(1) The year ended May 31, 2014.
(2) The year ended May 31, 2015.
Please include your work in the answer so I can see where I went wrong.
Explanation / Answer
Common stock details For the period June 1 2013-May 31.2014. Details No of shares Duration Weighted No Opening balance common stock 1,369,200 12 months 1,369,200.00 Sep 1 2013 issue 459,600.00 9 months 344,700.00 Weighted avergae no of shares 1,713,900.00 Common stock details For the period June 1 2014-May 31.2015. Details No of shares Duration Weighted No Opening balance common stock 1,369,200 12 months 1,369,200.00 Sep 1 2013 issue 459,600.00 12.00 459,600.00 Dec 1 2014 20% stock dividend issue 365,760.00 12 months 365,760.00 As stock dividend is issued without consideration, it is taken as iff issued in the previous period Weighted avergae no of shares 2,194,560.00