Carmen Company reported 557.5 million in net income in 2010. Then on January 1,
ID: 2484210 • Letter: C
Question
Carmen Company reported 557.5 million in net income in 2010. Then on January 1, 2010 the company had 600 million shares of common stock outstanding. On April 1, 2010 34 million shares of common stock were sold for cash. On June 1, 2010 Carmen Company’s stock split 2 for 1. On July 2010, 9 million shares were reacquired as treasury stock. Be mindful that you need to restate the stock split as if it happened at the beginning of the year. You will need compute the Weighted Average Shares Outstanding to solve for the Basic EPS.
Explanation / Answer
Net income in 2010 - 557.5
January 1, 2010 - 600
Add: Sold for Cash - 34
Add: Stock Split - 600
Less: Shares reacquired - 9
Outstanding shares = 1225
Basic EPS = 0.45