Question

On January 1, 2021, Albacore Company had 260,000 shares of its common stock issued and outstanding. Albacore issued a 12% stock dividend on July 1, 2021. On October 1, 2021, Albacore retired 9,000 of its common shares. When calculating basic earnings per share for 2021, what is the appropriate number of shares for Albacore to use in the denominator of the EPS fraction

Answer 1

Answer: 288,950 shares

Step-by-step explanation:

The number of shares to use is:

= Beginning stock + Stock dividend - Stock retired

Stock dividend:

= 260,000 * 12%

= 31,200 shares

Stock retired:

= 9,000 * 3/12 months because it was retired in October

= 2,250 shares

Number of shares:

=260,000 + 31,200 - 2,250

= 288,950 shares