Cracker Company had 2 million shares of common stock outstanding all through 2017. On April 1, 2018, an additional 100,000 shares were sold and issued. On September 30, 2018, Cracker declared a 2-for-1 stock split. Net income in 2018 and 2017 was $10 million and $8 million, respectively. In the 2018 comparative financial statements, EPS (rounded) would be reported as follows:
A) Option A
B) Option B
C) Option C
D) Option D

Question

Cracker Company had 2 million shares of common stock outstanding all through 2017. On April 1, 2018, an additional 100,000 shares were sold and issued. On September 30, 2018, Cracker declared a 2-for-1 stock split. Net income in 2018 and 2017 was $10 million and $8 million, respectively. In the 2018 comparative financial statements, EPS (rounded) would be reported as follows: 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

2017: $8,000,000 ÷ (2,000,000 × 2) = $2.00
2018: $10,000,000 ÷ [(2,000,000 × 2) + (100,000 × 9/12 × 2)] = $2.41

Cracker Company Had 2 Million Shares of Common Stock Outstanding