Question

The Heath Corporation reported net income for 2018 of $177,500. Heath began the year with 100,000 shares of $5 par value common shares outstanding and 2,500 shares of $100 par value 8% preferred shares outstanding. On October 1, Heath sold 10,000 shares of common stock for $6 per share. Heath paid dividends to the common shareholders in December.

The weighted average number of common shares used to compute earnings per share for 2018 is:

Answer 1

97,500 shares

Step-by-step explanation:

Earnings Per Share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stock

Calculation of Weighted Average Number of Common Stock:

Outstanding At Beginning of the year 100,000

Sold Common Shares October (3/12× 2,500 shares) (2,500)

Total 97,500

Therefore the weighted average number of common shares used to compute earnings per share for 2018 is 97,500 shares.