A company had 30,000 shares of common stock outstanding on January 1,2006.On March 1,the company issued an additional 18,000 shares of common stock.Net income for the year was $99,000 (no extraordinary items).The earnings per share were (round to the nearest cent):
A)$0.18
B)$1.27
C)$2.06
D)$2.57

Question

Quizplus · Accepted Answer

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

The weighted average number of shares outstanding is calculated as follows:

(30,000 shares x 2/12 of a year) + (48,000 shares x 10/12 of a year) = 5,000 + 40,000 = 45,000

Therefore, the earnings per share is:

$99,000 / 45,000 shares = $2.20 per share

Since we need to round to the nearest cent, the answer is:

$2.06 per share

Therefore, the best choice is C.

A Company Had 30,000 Shares of Common Stock Outstanding on January