Problem:
On December 31, 1998, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding. All shares were sold for $7.50. On June 30, 1999, the firm issued an additional 135,000 shares for $7 per share. The 1999 income was $319,200. On September 1, 2000, a 15 percent stock dividend was issued to all common shareholders. On October 1, 2000, 60,000 shares were reacquired as treasury shares. Net income in 2000 was $278,063.
(1) Compute the weighted average number of common shares outstanding for 1999 and 2000 that should be shown on comparative statements at the end of 2000.
(2) Compute the basic earnings per share in 1999 and 2000 to be reported on comparative statements at the end of 2000.