For the year ended December 31, 2016, Norstar Industries reported net income of

Question

For the year ended December 31, 2016, Norstar Industries reported net income of $925,000. At January 1, 2016, the company had 800,000 common shares outstanding. The following changes in the number of shares occurred during 2016:

Compute Norstar's earnings per share for the year ended December 31, 2016. (Enter your answers in thousands.)

Apr. 30 Sold 45,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 42,000 shares as part of the consideration for the purchase of assets from a subsidiary.

Explanation / Answer

Norstar Industries Common Stock Nos Holding time in years Weighted Average No of Shares Initial Outstanding Equity              800,000 100%                          800,000 Apr 30 Public Issue                45,000 66.67%                            30,000 Jun 1. Issueto subsidiary                42,000 58.33%                            24,500 Total weighted average no of outstanding shares                          854,500 Total weighted average no of outstanding shares              854,500 Net Income for 2016              925,000 Earning per share= Net Income / Weighted Avg no of shares =                     1.08 So EPS =$1.08/share

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