On January 1,2016,Albacore Company had 300,000 shares of its common stock issued and outstanding.Albacore issued a 10% stock dividend on July 1,2016.On October 1,2016,Albacore retired 12,000 of its common shares.When calculating basic earnings per share for 2016,what is the appropriate number of shares for Albacore to use in the denominator of the EPS fraction?
A)303,000.
B)342,000.
C)312,000.
D)327,000.

Question

Quizplus · Accepted Answer

The stock dividend increases the shares by 10%, so 300,000 * 1.10 = 330,000 shares as of July 1. The retirement of 12,000 shares on October 1 results in 318,000 shares. The weighted average calculation is: (300,000 * 6/12) + (330,000 * 3/12) + (318,000 * 3/12) = 327,000 shares.

On January 1,2016,Albacore Company Had 300,000 Shares of Its Common