On January 1, a corporation had 25,000 shares of common stock outstanding. An additional 10,000 shares were issued on July 1, and on November 1, the company declared a 2-for-1 stock split. What is the denominator in the earnings per share calculation?

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Quizplus · Accepted Answer

The weighted average shares before the split is calculated as: (25,000 * 6/12) + (35,000 * 4/12) + (70,000 * 2/12) = 30,000. After the 2-for-1 stock split, the shares double, resulting in 60,000 shares for the EPS calculation.

On January 1, a Corporation Had 25,000 Shares of Common