Question

On the first day of 2021, Paccar had 100,000 shares of common stock outstanding. The following transactions occurred during 2021: March 1: Reacquired 2,000 shares, accounted for as treasury stock. September 30: Sold all the treasury shares. December 1: Sold 11,000 new shares for cash. December 31: Reported a net income of $287,750. Required: Calculate Paccar's basic earnings per share for the year ended December 31,

Answer 1

Paccar

Earnings per share for the year ended December 31

= $2.59

Step-by-step explanation:

a) Data and Calculations:

January 1, 2021:

Outstanding shares of common stock = 100,000

During 2021:

March 1 Treasury stock 2,000 shares

September 30 Treasury stock (2,000) shares

December 1 Issue of 11,000 new shares

December 31: Outstanding shares of common stock = 111,000

Reported net income = $287,750

Earnings per share for the year ended December 31 = Net income/Outstanding shares of common stock

= $287,750/111,000

= $2.59