Comparative Earnings per Share
Response to the following problem:
Ryan Company reports net income of $5,125 for the year ended December 31, 2010, its first year of operations. On January 4, 2010, the company issued 9,000 shares of common stock. On August 2, 2010, it issued an additional 3,000 shares of stock, resulting in 12,000 shares outstanding at year-end.
During 2011, Ryan Company earned net income of $16,400. It issued 2,000 additional shares of stock on March 3, 2011 and declared and issued a two-for-one stock split on November 3, 2011, resulting in 28,000 shares outstanding at year-end.
During 2012, Ryan Company earned net income of $23,520. The only common stock transaction during 2012 was a 20% stock dividend issued on July 2, 2012.
Required:
1. Compute the basic earnings per share that would be disclosed in the 2010 annual report.
2. Compute the 2010 and 2011 comparative basic earnings per share that would be disclosed in the 2011 annual report.
3. Compute the 2010, 2011, and 2012 comparative basic earnings per share that would be disclosed in the 2012 annual report.