Question

Vent, Inc. reported net income of $770,000 for 2018. Vent sold 15,000 shares of treasury stock acquired in a previous year on July 1 and 15,000 new shares on November 1. At year-end, 180,000 shares were outstanding. Vent had 20,000 shares of $100 par value 7% preferred stock outstanding all year. Vent paid dividends to the preferred shareholders. The weighted average number of common shares used to compute earnings per share for 2018 is

Answer 1

The weighted average number of shares used to compute earnings per share for 2018 is 160,000

Step-by-step explanation:

At the beginning of the year Vent would have had 180,000 shares less the two new 15,000 shares newly issued(180,000-15,000-15000)=150,000

Outstanding common stock at beginning of the year 150,000*12/12=150,000

Shares issued on July 1 15,000*6/12 =7500

Shares issued on November 1 15,000*2/12 =2,500

Weighted average number of shares 160,000

The number with which to compute earnings per share is 160,000 shares as shown above.