For the year ended December 31, 2016, Norstar Industries reported net income of
ID: 2459769 • Letter: F
Question
For the year ended December 31, 2016, Norstar Industries reported net income of $980,000. At January 1, 2016, the company had 1,130,000 common shares outstanding. The following changes in the number of shares occurred during 2016:
Apr. 30 Sold 100,000 shares in a public offering.
May 24 Declared and distributed a 5% stock dividend.
June 1 Issued 114,000 shares as part of the consideration for the purchase of assets from a subsidiary.
Required: Compute Norstar's earnings per share for the year ended December 31, 2016. (Enter your answers in thousands.)
Explanation / Answer
Net income = 980000
Weighted average number of Share outstanding =
Beginning share outstanding = 1130000
Add- sold in public offering = 100000 * 8/12= 66666.67
Less- stock dividend declared and distributed = 59833.33 * 221/365 = 36227.852
Add- issued share as part of the consideration for the purchase of assets from a subsidiary = 114000 * 7/12 = 6650
Earnings per share = net income / weighted average number of share outstanding
=980000/ 1167089
=0.839696