Final answer:
To compute the basic EPS, we need to calculate the weighted average number of common shares outstanding. This involves considering the changes in shares throughout the year. In this case, the weighted average number of shares is approximately 437,333.
Step-by-step explanation:
The number of shares to be used in computing basic EPS is the weighted average number of common shares outstanding during the period. To calculate this, we need to consider the changes in shares throughout the year.
Given the following events:
Outstanding on January 1: 104,000 shares
Additional shares issued on 3/31: 5,040,000 shares
10% stock dividend distributed on 6/30: 10% of the outstanding shares (104,000 shares) = 10,400 shares
Shares reacquired on 9/30: 104,000 shares
We can calculate the weighted average number of common shares outstanding by taking into account the number of shares outstanding for each period.
Weighted average shares = (104,000 shares × 3 months + 5,040,000 shares × 3 months + 104,000 shares × 3 months) / 12 months
Simplifying the equation gives us:
Weighted average shares = (104,000 shares + 5,040,000 shares + 104,000 shares) / 12 months = 5,248,000 shares / 12 months = 437,333.33 shares
Therefore, the number of shares to be used in computing basic EPS is approximately 437,333 shares.