A company had 240,000 shares of common stock outstanding on January 1 and then sold 60,000 additional shares on April 30.Net income for the year was $426,750.What are earnings per share?

Question

Quizplus · Accepted Answer

First, we need to calculate the weighted average number of shares outstanding:

240,000 shares * 4/12 (4 months out of 12 months in a year) = 80,000 weighted average shares before April 30 
300,000 shares * 8/12 (8 months out of 12 months in a year) = 200,000 weighted average shares after April 30

Total weighted average shares = 80,000 + 200,000 = 280,000

Next, we can calculate the earnings per share:

Earnings per share = Net income / Weighted average shares 
Earnings per share = $426,750 / 280,000 shares 
Earnings per share = $1.52

Therefore, the answer is B.

A Company Had 240,000 Shares of Common Stock Outstanding on January