Question

At December 31, 2018, Hancock Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2018. Net income for the year ended December 31, 2018, was $1,700,000. What should be Hancock's 2018 earnings per common share, rounded to the nearest penny

Answer 1

Answer:

$4.00

Explanation:

For computation of earnings per common share first we need to find out the number of shares which is shown below:-

Number of shares = Outstanding shares + Issued shares × From Oct to Dec 31 ÷ Total months in a year

= 400,000 + 100,000 × 3 ÷ 12

= 425,000

Earnings per share = Net income ÷ Number of shares

= $1,700,000 ÷ 425,000

= $4.00

Therefore we applied the above formula