On January 1,2015,Carleton Corporation had 55,000 shares of $6 par value common stock outstanding.On March 31,2015,Carleton issued an additional 10,000 shares in exchange for a building.What number of shares will be used in the computation of earnings per share for the year 2015?

Question

Quizplus · Accepted Answer

The weighted average number of shares outstanding should be used in the calculation of earnings per share. To determine the weighted average number of shares outstanding, we need to take into account the time-weighted portion of each share class that was outstanding during the year.

From January 1 to March 31, 55,000 shares were outstanding (91 days). From March 31 to December 31, 65,000 shares were outstanding (275 days).

The weighted average number of shares outstanding is [(55,000 x 91) + (65,000 x 275)] / 366 = 62,500.

Therefore, the answer is C) 62,500.

On January 1,2015,Carleton Corporation Had 55,000 Shares of $6 Par