Traditional Bathrooms Inc

question 50

Essay

Traditional Bathrooms Inc. (TBI)had 80,000 ordinary shares outstanding on January 1, 2020. Transactions throughout 2020 affecting its shareholdings follow.
• February 1: TBI issued 200,000, $10, cumulative 10% preferred shares.
• March 1: TBI issued 40,000 ordinary shares.
• April l: TBI declared and issued a 8% stock dividend on the ordinary shares.
• July 1: TBI repurchased and cancelled 30,000 ordinary shares.
• October 1: TBI declared and issued a 3-for-l stock split on the ordinary shares.
• December 31: TBI declared $99,600 in dividends on the ordinary shares.
• Net income for the year ended December 31, 2020 was $600,000. Its tax rate was 40%.
Required:
a. What was weighted average number of ordinary shares outstanding in 2020?
b. What was basic EPS in 2020?
c. If the preferred shares issued on February 1, 2020 were non-cumulative, what would basic EPS for 2020 have been?

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Definitions:

Serial Position Effect

A memory phenomenon where recall accuracy varies as a function of an item's position within a study list, often showing enhanced memory for items at the beginning and end of the list.

Primacy Effect

The tendency for individuals to remember information presented at the beginning of a list better than information appearing in the middle or end.

Recency Effect

A cognitive bias which results in better recall of the most recent items or experiences in a series due to their late position in memory retrieval.

State-Dependent Memory Effect

The tendency to recall information better if one is in the same pharmacological or psychological state as when the information was encoded.