Dublin Inc. had the following common stock record during the current calendar year: A 10% stock dividend was paid on December 1. What is the number of shares to be used in computing basic EPS?
A)2,075,000.
B)2,282,500.
C)2,475,000.
D)2,620,000.

Question

Quizplus · Accepted Answer

To compute basic EPS, the weighted average number of shares outstanding during the year is used. The stock dividend increases the number of shares, and this adjustment is applied retroactively to the beginning of the year. If the original number of shares was 2,075,000, a 10% stock dividend increases this by 207,500 shares, resulting in 2,282,500 shares.