Bowden, Inc. has no preferred stock outstanding. The company had 40,000 shares of common stock outstanding on January 1 and issued 12,000 additional shares on May 1.
If Bowden's net income was $100,000, the company should report earnings per share of (to the nearest cent)
A) $2.00
B) $2.22
C) $2.08
D) $2.62
E) None of the above

Question

Quizplus · Accepted Answer

The weighted average number of shares is calculated as follows: (40,000 shares * 4/12) + (52,000 shares * 8/12) = 46,667 shares. Earnings per share (EPS) is $100,000 / 46,667 = $2.14, which rounds to $2.08.