Question
On January 1, 20x0, Chang Corp. had 480,000 shares of common stock outstanding. During 20x0, it had the following transactions that affected the common stock
On January 1, 20x0, Chang Corp. had 480,000 shares of common stock outstanding. During 20x0, it had the following transactions that affected the common stock account. Feb. 1: Issued 120,000 shares Mar. 1: Issued a 20% stock dividend May 1: Acquired 100,000 shares of treasury stock Jun. 1: Issued a 3-for-1 stock split Oct. 1: Reissued 60,000 shares of treasury stock
a. Determine the weighted-average number of shares outstanding as of December 31, 20x0.
b. Assume that Chang Corp. earned net income of $3,256,000 during 20x0. In addition, it had 100,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 20x0. Compute earnings per share for 20x0, 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 cumulative. Compute earnings per share for 20x0.
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