On January 1, 2014, Vermont Maple Corp. had 2,650,000 shares of common stock issued and outstanding. During

Question:

On January 1, 2014, Vermont Maple Corp. had 2,650,000 shares of common stock issued and outstanding. During 2014, it had the following transactions that affected the common stock account.

Mar. 1 .......Issued 250,000 shares in exchange for land

Apr. 1 .......Acquired 200,000 shares of treasury stock

July 1 ........Issued a 20% stock dividend

Sept. 1 .......Reissued 240,000 shares of treasury stock

(adjusted for 20% stock dividend)

Oct. 1 .......Issued a 2-for-1 stock split

Instructions

(a) Determine the weighted average number of shares outstanding as of December 31, 2014.

(b) Assume that Vermont Maple Corp. earned net income of $8,352,000 during 2014. In addition, it had 200,000 shares of 9%, $100 par value nonconvertible, cumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2013 or 2014. Compute earnings per share for 2014, using the weighted-average number of shares determined in part (a).

(c) Assume the same facts as in part (b), except that the preferred stock was noncumulative. Compute earnings per share for 2014.

(d) Assume the same facts as in part (b), except that net income included a loss from discontinued operations of $500,000, net of $300,000 in income taxes. Compute earnings per share for 2014.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...