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 $975,000. At January 1, 2016, the company had 1.110,000 common shares outstanding. The following changes in the number of shares occurred during 2016: Apr. 30 Sold 95,000 shares in a public offering May 24 Declared and distributed a 5% stock dividend June 1 Issued 108,000 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.) Numerator Denominator Earnings per Share

Explanation / Answer

Computation of Norstar’s earnings per share for the year ended December 31, 2016:

Weighted average outstanding shares = (1,110,000 x 1.05) + (95,000 x 8/12 x 1.05) + (108,000 x 7/12)
= 1,295,000

  

Numerator / Denominator = Earnings per share $975,000 / 1,295,000 = $0.75

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