Module Problem-Solution Assignment:
Problem 1
"On January 1, 2010 Boxer Company had 110,000 share of common stock which was outstanding. During 2010 the following transactions took place:
• April 1- Repurchased 2000 shares which was accounted for as Treasury Stock
• August 30-Sold all the treasury shares
• December 1-Sold 10,000 shares for cash
• December 31-Reported Net Income in the amount of $200,000
• Paid preferred dividends of 20,000
These transactions occurred in 2011:
January 15: Declared and then issued at 20% stock dividend
December 31: Boxer Company reported net income in the amount of $238,500
Requirements:
1 Calculate Boxer Company's Basic EPS for a simple capital structure for the both years individually. The preferred dividends will be applied to both years calculation of earnings per share. Be mindful that stock dividends need to be restated as if it happened at the beginning of the year. You will need to computer the Weighted Average Shares to solve for this problem.
Problem 2
Carmen Company reported 557.5 million in net income in 2010. Then on January 1, 2010 the company had 600 million shares of common stock outstanding. On April 1, 2010 34 million shares of common stock were sold for cash. On June 1, 2010 Carmen Company's stock split 2 for 1. On July 2010, 9 million shares were reacquired as treasury stock. Be mindful that you need to restate the stock split as if it happened at the beginning of the year. You will need compute the Weighted Average Shares Outstanding to solve for the Basic EPS.
Requirements:
2 Take the information in Problem 2 and compute Carmen Company's Earnings per Share for the year ended December 31, 2010.