For the year ended December 31, 2016, Norstar Industries reported net income of
ID: 2454855 • Letter: F
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.)
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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: share outstanding as on 31 Dec., 2016:- SHARES
On January 1, 2016, common shares outstanding = 800,000
On Apr. 30 Sold shares in a public offering = 45,000
On May 24 Declared and distributed 5% Stock Dividend = 42250 i.e. 800000 + 45000= 845000 * 5%=42250
On June 1 Issued shares as part of the consideration for
the purchase of assets from a subsidiary = 42000
On December 31, 2016, common shares outstanding = 929,250
For the year ended December 31, 2016, Norstar Industries reported net income of $925,000.
Earnings per share = $925000 / 929250 shares = $0.9954 per share