Accounting Question EPS?

Question:

What is the formular to deterime the earnings per share (on a weighted average basis) to the following question. I have a series of question designed just like this on and the formular to determine the answer would be most helpful.

A company had 130,000 shares of common stock outstanding on January 1 and then sold 30,000 additional shares on March 30. Net income for the year was $495,625. What are earnings per share (on an weighted average basis).

Thank you in advance.

Answer:
The weighted average number of shares for the year is 130,000*(3/12) + 160,000*(9/12) = 152,500 . (Basically, you are weighting the two amounts of shares outstanding during the year by the amount of time that this was the actual number of shares outstanding.)

So then, the EPS is $495,625/152,500 = $3.25.

Hope this helps!

I am going to say 3.097 EPS.

$495,625 /130,000 + 30,000 = 160,000 = 3.097

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Nathan
http://oureconomics.blogspot.com/...

Accounting Question EPS?

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