Problem 17-2 (Part Level Submission)

Oriole Corporation, a publicly traded company, is preparing the comparative financial statements to be included in the annual report to shareholders. Oriole's fiscal year ends May 31. The following information is available.

1.Income from operations before income tax for Oriole was $1,300,000 and $1,700,000, respectively, for the fiscal years ended May 31, 2018, and 2017.

2.Oriole experienced a loss from discontinued operations of $600,000 from a business segment disposed of on March 3, 2018.

3.A 20% combined income tax rate applies to all of Oriole Corporation's profits, gains, and losses.

4.Oriole's capital structure consists of preferred shares and common shares. The company has not issued any convertible securities or warrants and there are no outstanding stock options.

5.Oriole issued 153,000 of $10 par value, 5% cumulative preferred shares in 2010. All of these shares are outstanding, and no preferred dividends are in arrears.

6.There were 1.50 million common shares outstanding on June 1, 2016. On September 1, 2016, Oriole sold an additional 500,000 common shares at $14 per share. Oriole distributed a 20% stock dividend on the common shares outstanding on December 1, 2017.

7.These were the only common share transactions during the past two fiscal years.

Determine the weighted average number of common shares that would be used in calculating earnings per share on the current comparative income statement for:

1. The year ended May 31, 2018
2. The year ended May 31, 2017