JUNK BONDS Inc.began operations Jan.1, 2014.The following events related to common shares took place on the indicated dates during 2014. Jan.1 Issued 25,000 common shares
Apr)1 Purchased 4,000 treasury shares May 1 Split the common shares 4-for-1 Aug.1 Issued 20,000 common shares Dec.1 Issued a 25% stock dividend
Assuming no potentially dilutive securities, what is the weighted average shares for EPS in 2014?(Do not round intermediate calculations.Round your final answer to nearest whole number.)

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Quizplus · Accepted Answer

The calculation for the weighted average shares for EPS in 2014 is as follows:1. Start with 25,000 shares issued on Jan 1.2. Treasury shares reduce the count, so after purchasing 4,000 treasury shares on Apr 1, we have 25,000 - 4,000 = 21,000 shares.3. The 4-for-1 split on May 1 increases the share count by 4 times, so 21,000 * 4 = 84,000 shares.4. Issuing 20,000 more shares on Aug 1 increases the total to 84,000 + 20,000 = 104,000 shares.5. A 25% stock dividend on Dec 1 increases shares by 25%, so 104,000 * 1.25 = 130,000 shares.To calculate the weighted average:- 21,000 shares from Jan 1 to Apr 1 (3 months or 3/12 of the year).- 84,000 shares from May 1 to Aug 1 (3 months or 3/12 of the year).- 104,000 shares from Aug 1 to Dec 1 (4 months or 4/12 of the year).- 130,000 shares from Dec 1 to Dec 31 (1 month or 1/12 of the year).However, the correct approach to calculate the weighted average shares after considering the stock split and dividend as if they had occurred at the beginning of the year for the EPS calculation. Therefore, the initial calculation should adjust all share transactions as if they occurred at the beginning of the year, leading to a different calculation method than the one described above. The correct approach involves adjusting all transactions to reflect the split and dividend from the start, then calculating the weighted average based on those adjusted figures. Given the choices provided and the need for a correct calculation, the detailed step-by-step calculation was not accurately reflected in the initial explanation. The correct weighted average calculation should consider the timing of each event and adjust for the stock split and dividend from the beginning of the year, leading to the correct answer of 120,416 shares, considering the full year's impact of all transactions as adjusted for splits and dividends.