Albatross Shipping had 100,000 shares of common stock outstanding on January 1.On September 1,Albatross issued an additional 30,000 common shares.Albatross has no treasury stock.If its net income was $12,650 for the year,its earnings per share for the year was ________,rounded to the nearest cent.

Question

Quizplus · Accepted Answer

To calculate the earnings per share (EPS), you divide the net income by the weighted average number of shares outstanding. From January 1 to August 31 (8 months), there were 100,000 shares outstanding. From September 1 to December 31 (4 months), there were 130,000 shares outstanding due to the issuance of an additional 30,000 shares. The weighted average number of shares is calculated as follows: (100,000 shares * 8/12) + (130,000 shares * 4/12) = 66,667 + 43,333 = 110,000 shares. The EPS is then $12,650 / 110,000 = $0.115, which rounds to $0.12.

Albatross Shipping Had 100,000 Shares of Common Stock Outstanding on January