On January 1, 2018, Shamu Corporation had 100,000 shares of common stock outstan
ID: 2511736 • Letter: O
Question
On January 1, 2018, Shamu Corporation had 100,000 shares of common stock outstanding. The following transactions occurred during 2018:
March 1: Reacquired 3,800 shares, accounted for as treasury stock.
September 30: Sold all the treasury shares.
December 1: Sold 12,800 new shares for cash.
December 31: Reported a net income of $206,500.
The following transactions occurred during 2019:
January 10: Declared and issued a 30% stock dividend.
December 31: Reported a net income of $276,800.
Required: Calculate Shamu's basic earnings per share for both years for presentation in comparative financial statements that will be prepared at the end of 2019. (Round your answers to 2 decimal places.)
Explanation / Answer
For 2018 the EPS will be calculated again as stock dividend is issued in 2019 so its effect needs to be given 2018 Basic EPS $1.61 206500/((100000*1.3)-(3800*10/12*1.3)+(3800*3/12*1.3)+(12800*1/12*1.3)) 2019 Basic EPS $1.89 276800/((100000-3800+3800+12800)*1.3) If any doubt please comment