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.)

Answer format:

Numerator =

-----------------                        = Earnings pershare

Denominator=

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

Earnings pershare = (Net Income - Prefered Dividend)/Weighted Average Outstanding Share

Weighted Average Outstanding Share= 800000 *1.05 *4/12 + (800000+45000)*1.05 *1/12 + (887250+42000)*7/12

Weighted Average Outstanding Share= 896000

Earnings pershare = (925000-0)/896000

Earnings pershare = 1.032

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