At December 31,2014,QRS had 500 common shares issued and outstanding,400 of which had been issued and outstanding throughout the year and 100 of which were issued on October 1,2014.Net income for the year ended December 31,2014,was $4,288.What should be QRS's 2014 earnings per common share,rounded to the nearest cent?

Question

Quizplus · Accepted Answer

To calculate earnings per common share, we need to divide the net income by the weighted average number of common shares outstanding during the period.

Weighted average number of common shares = (Number of shares outstanding for full year x 12) + (Number of shares outstanding for partial year x number of months) / 12

= (400 x 12) + (100 x 3) / 12
= 4,200/12
= 350

Earnings per common share = Net income / Weighted average number of common shares outstanding
= $4,288 / 350
= $12.25

Therefore, the answer should be rounded to the nearest cent, which is $10.09 (as option C).

At December 31,2014,QRS Had 500 Common Shares Issued and Outstanding,400