On December 31, 2012, Beta Company had 300,000 shares of common stock issued and outstanding. Beta issued a 5% stock dividend on June 30, 2013. On September 30, 2013, 40,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2013

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2020-11-02T02:43:52+01:00

Answer:

305,000 shares

Explanation:

Calculation for the appropriate number of shares to be used in the basic earnings per share

First step is to calculate the 5% Stock dividend

Stock dividend = 300,000*5%

Stock dividend =15,000

Second step is to calculate Treasury stock

Treasury stock = 40,000*3/12

Treasury stock= 10,000

Last step is calculate the appropriate number of shares to be used

Using this formula

Appropriate number of shares =Common stock issued and outstanding shares+( Stock dividend-Treasury stock)

Let plug in the formula

Appropriate number of shares =300,000 shares+(15,000-10,000

Appropriate number of shares =300,000 shares+5,000

Appropriate number of shares =$305,000 Shares

Therefore the appropriate number of shares to be used in the basic earnings per share will be 305,000 shares