Question

Hill Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $1,680,000 for the year ending December 31, 2012. What would be the earnings per share of common stock for 2012?

Answer 1

To calculate the earnings per share for Hill Corp. in 2012, divide the income applicable to common stock by the weighted average number of shares outstanding.

Step-by-step explanation:

To calculate the earnings per share, we need to determine the weighted average number of shares outstanding. For Hill Corp., we start with 600,000 shares outstanding on January 1 and add the 900,000 shares issued on July 1, giving us a total of 1,500,000 shares for the year. Next, we divide the income applicable to common stock of $1,680,000 by the weighted average number of shares. Earnings per share for 2012 would be calculated as $1,680,000 / 1,500,000 shares = $1.12 per share.