Birch Inc., a publicly traded company, had 600,000 common shares outstanding at the beginning of 2021. On March 1, 2021, Birch purchased and retired 120,000 shares that had been owned by one of the company founders. On June 1, the company issued a 2 for 1 stock split. Birchs after-tax 2021 earnings amounted to $ 1,200,000, after a loss from discontinued operations of $460,000 (net of tax).

Instructions

1. Calculate Birchs weighted average common shares outstanding for 2021 (5 marks)
2. Calculate Birchs basic earnings per share for 2021 as it should be reported to shareholders. Round to the nearest cent. (3 marks)
3. Assume that Birch issued a 20% stock dividend on January 31, 2022 and that the financial statements for the year ended December 31, 2021 were issued on February 15, 2022. Calculate basic earnings per share for 2021 as it should be reported to shareholders. Round to the nearest cent. (2 marks)