Reading 32: Understanding the Income Statement - LOS h, (Pa

21.Sampson Corp. had 500,000 shares of common stock outstanding at the beginning of the year.  The average market price was $20.

§       On April 1, Sampson issued 100,000 shares of $1000 par value 10 percent preferred stock.

§       On July 1, Sampson issued 200,000 warrants to purchase 10 shares of common stock  each at $22 per share.

§       On October 1, Sampson repurchased 60,000 of common stock as treasury stock for $15 per share.

The weighted average common shares outstanding Sampson should use to compute basic earnings per share (EPS) was:

A)   515,000.

B)   485,000.

C)   600,000.

D)   700,000.

22.Connecticut, Inc.’s stock transactions during the year 2005 were as follows:

§       January 1                      360,000 common shares outstanding.

§       April 1                           1 for 3 reverse stock split.

§       July 1                            60,000 common shares issued.

When computing for earnings per share (EPS) computation purposes, what is Connecticut’s weighted average number of shares outstanding during 2005?

A)   150,000.

B)   210,000.

C)   140,000.

D)   270,000.

23.The ZZT Company went public on June 1, 2004, by issuing 25 million shares of common stock. In 2005, the firm raised additional capital by issuing 2 million shares of preferred stock. What is the weighted average number of common shares outstanding for the year ending December 31, 2005?

A)   25,000,000.

B)   14,583,333.

C)   10,416,667.

D)   15,750,000.

24.The following information pertains the QRK Company:

§       One million shares of common stock outstanding at the beginning of 2005.

§       200,000 shares issued on the last day of March.

§       500,000 shares issued on the last day of June.

§       800,000 shares issued on the last day of September.

What is the number of shares that should be used to compute 2005 earnings per share for the QRK Company?

A)   2.5 million.

B)   1.9 million.

C)   1.5 million.

D)   1.6 million.

25.At the beginning of 2004, Osami Corporation had 1.4 million shares of common stock outstanding and no preferred stock. At the end of August 2004, Osami issued 1.2 million new shares of common stock. If Osami reported net income equal to $7.2 million, what were its earnings per share (EPS) for 2004?

A)   $3.33.

B)   $2.77.

C)   $1.66.

D)   $4.00.