General Corporation was organized on January 1 and issued 500,000 ordinary share on that date. On July 1, an additional 200,000 shares were issued for cash. Profit for the year was $5,184,000. Net earnings per share amounted to:

Question

Quizplus · Accepted Answer

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

Weighted average number of shares outstanding:

- 500,000 shares for the full year
- 200,000 shares for half a year (from July 1 to December 31)

Weighted average = (500,000 x 12/12) + (200,000 x 6/12) = 600,000

Net earnings per share = $5,184,000/600,000 = $8.64

Therefore, the answer is D.

General Corporation Was Organized on January 1 and Issued 500,000