On January 1, 2018, Buffalo Corp. had 488,000 shares of common
stock outstanding. During 2018, it had the following transactions
that affected the Common Stock account. February 1 Issued 115,000
shares March 1 Issued a 10% stock dividend May 1 Acquired 96,000
shares of treasury stock June 1 Issued a 3-for-1 stock split
October 1 Reissued 61,000 shares of treasury stock
a.Determine the weighted-average number of shares outstanding as
of December 31, 2018.
b.Assume that Buffalo Corp. earned net income of $3,330,000
during 2018. In addition, it had 105,000 shares of 9%, $100 par
nonconvertible, noncumulative preferred stock outstanding for the
entire year. Because of liquidity considerations, however, the
company did not declare and pay a preferred dividend in 2018.
Compute earnings per share for 2018, using the weighted-average
number of shares determined in part (a).
c.Assume the same facts as in part (b), except that the
preferred stock was cumulative. Compute earnings per share for
2018.