Assume XYZ uses a calendar year for financial reporting. The company is authorized to issue 32,500,000 shares...

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Accounting

Assume XYZ uses a calendar year forfinancial reporting. The company is authorized to issue 32,500,000shares of $1 par common stock. Listed below is a summary of XYZ’scommon stock activities.
2,600,000
780,000
1,625,000
5,005,000
1-Number of common shares issuedand outstanding at December 31, 2014
2-Shares issued as a result of a30% stock dividend on Sept. 1, 2015
3-Shares issued for cash on June30, 2016
Number of common shares issued andoutstanding at December 31, 2016
4-A 2-for-1 stock split of XYZ’scommon stock took place on Oct. 1, 2017


Instructions:
A)Compute the weighted averagenumber of common shares to be used in computing earnings per commonshare for 2015 on the 2016 comparative income statement.
B) Compute the weighted averagenumber of common shares to be used in computing earnings per commonshare for 2016 on the 2016 comparative income statement.
Compute the weighted average number of common shares to be usedin computing earnings per common share for 2016 on the 2017comparative incomestatement.

Compute the weighted average number of common shares to be usedin computing earnings per common share for 2017 on the 2017comparative incomestatement.

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4.2 Ratings (843 Votes)

1)
Jan. 1, 2015–Aug. 31, 2015 (2,600,000 X 8/12)	1,733,333.33
Retroactive adjustment for stock dividend	x 1.30
Jan. 1, 2015–Aug. 31, 2015, as adjusted	2,253,333.33
Sep. 1, 2013 - Dec. 31, 2013 (2,600,000 + 780,000) x 4/12)	1,126,666.67
Weighted-average outstanding shares outstanding	3,380,000.00
2)
Jan.1, 2016 - Jun. 30,2016 ( 3,380,000 x 6/12 )=	1,690,000
Jul.1,2016 - Dec.3,2016 (5,005,000 x 6/12)	2,502,500
Weighted-average outstanding shares outstanding	4,192,500

3)
2016 weighted average number of shares previously computed	4,192,500
Adjustment for stock split 2 for 1	x2
Weighted-average outstanding shares outstanding	8,385,000

4)
Shares Outstanding Jan.1,2017 to Sep.30 2017 = 5,005,000 x 9/12	3753750
Split 2 for1 Jan.1 2017 to sep.30 ,2017 = 5,005,000 x 9/12	3753750
Oct 1 ,2017 = (5,005,000 + 5,005,000) x 3/12	2502500
Weighted-average outstanding shares outstanding	10010000

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Transcribed Image Text

Assume XYZ uses a calendar year forfinancial reporting. The company is authorized to issue 32,500,000shares of $1 par common stock. Listed below is a summary of XYZ’scommon stock activities.2,600,000780,0001,625,0005,005,0001-Number of common shares issuedand outstanding at December 31, 20142-Shares issued as a result of a30% stock dividend on Sept. 1, 20153-Shares issued for cash on June30, 2016Number of common shares issued andoutstanding at December 31, 20164-A 2-for-1 stock split of XYZ’scommon stock took place on Oct. 1, 2017 Instructions:A)Compute the weighted averagenumber of common shares to be used in computing earnings per commonshare for 2015 on the 2016 comparative income statement.B) Compute the weighted averagenumber of common shares to be used in computing earnings per commonshare for 2016 on the 2016 comparative income statement.Compute the weighted average number of common shares to be usedin computing earnings per common share for 2016 on the 2017comparative incomestatement. Compute the weighted average number of common shares to be usedin computing earnings per common share for 2017 on the 2017comparative incomestatement.