Sarasota Inc. uses a calendar year for financial reporting. The company is authorized to issue 8,320,000 shares of $12 par common stock. At no time has Sarasota issued any potentially dilutive securities. Listed below is a summary of Sarasota’s common stock activities.
(a) Compute the weighted average number of common shares used in computing earnings per
common share for 2013 on the 2014 comparative income statement.
(b) Compute the weighted average number of common shares used in computing earnings per
common share for 2014 on the 2014 comparative income statement.
(c) Compute the weighted average number of common shares to be used in computing earnings per
common share for 2014 on the 2015 comparative income statement.
(d) Compute the weighted average number of common shares to be used in computing earnings per
common share for 2015 on the 2015 comparative income statement.
| 1. | Number of common shares issued and outstanding at December 31, 2015 | 2,140,000 | ||
| 2. | Shares issued as a result of a 12% stock dividend on September 30, 2016 | 256,800 | ||
| 3. | Shares issued for cash on March 31, 2017 | 2,030,000 | ||
| Number of common shares issued and outstanding at December 31, 2017 | 4,426,800 | |||
| 4. | A 2-for-1 stock split of Sarasota’s common stock took place on March 31, 2018 |
| (a) 2396800 shares | |
| Jan. 1, 2015–Sept. 30, 2015 (2,140,000 X 9/12) | 1605000 |
| Retroactive adjustment for stock dividend | X 1.12 |
| Jan. 1, 2015–Sept. 30, 2015, as adjusted | 1797600 |
| Oct. 1, 2015–Dec. 31, 2015 (2396800 X 3/12) | 599200 |
| 2396800 | |
| (b) 3919300 shares | |
| Jan. 1, 2016–Mar. 31, 2016 (2396800* 3/12) | 599200 |
| Apr. 1, 2016–Dec. 31, 2016 (4,426800 X 9/12) | 3320100 |
| 3919300 | |
| © 7838600 shares | |
| 2016 weighted average number of shares | |
| previously computed | 3919300 |
| Retroactive adjustment for stock split | X 2 |
| 7838600 | |
| (d)8853600 shares | |
| Jan. 1, 2017–Mar. 31, 2017 (4,426800 X 3/12) | 1106700 |
| Retroactive adjustment for stock split | X 2 |
| Jan. 1, 2017–Mar. 31, 2017, as adjusted | 2213400 |
| Apr. 1, 2017–Dec. 31, 2018 (8853600 X 9/12) | 6640200 |
| 8853600 |
