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The Alford Group had 260,000 shares of common stock outstanding at January 1, 2021. The following...

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Accounting

The Alford Group had 260,000 shares of common stock outstandingat January 1, 2021. The following activities affected common sharesduring the year. There are no potential common sharesoutstanding.
  

2021
Feb.28Purchased 6,000 shares of treasury stock.
Oct.31Sold the treasury shares purchased on February 28.
Nov.30Issued 24,000 new shares.
Dec.31Net income for 2021 is $1,419,000.
2022
Jan.15Declared and issued a 2-for-1 stock split.
Dec.31Net income for 2022 is $1,419,000.


Required:

1. Determine the 2021 EPS. (Do notround intermediate calculations.)
2. Determine the 2022 EPS.
3. At what amount will the 2021 EPS be presentedin the 2022 comparative financial statements?

(For all requirements, Enter your answers inthousands.)

Answer & Explanation Solved by verified expert
3.8 Ratings (337 Votes)

ANSWER

Part 1
Calculation of Weighted average number of shares:
Beginning Shares           260,000
Less: Feb 28 6,000/12*10              -5,000
Add: Oct 31 6,000/12*2                1,000
Add: Nov 30 24,000/12                2,000
Weighted Avg No of Shares b           258,000
Net Income a $   1,419,000
2021 EPS a/b $              5.50
Part 2
Calculation of Weighted average number of shares:
Beginning Shares           260,000
Less: Feb 28              -6,000
Add: Oct 31                6,000
Add: Nov 30             24,000
          284,000
Stock Split 284,000*2           568,000
Weighted Avg No of Shares b           568,000
Net Income a $   1,419,000
2022 EPS a/b $              2.50
Part 3
2021 EPS in 2022 Comparative Statement:
Net Income a $   1,419,000
No of Shares (258,000*2) b           516,000
2021 EPS in 2022 Comparative Statement: a/b $              2.75

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