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:

Jeremy Bentham

An English philosopher and jurist, considered the founder of modern utilitarianism, advocating that actions are right if they are useful or for the benefit of a majority.

Basic Job

A position of employment that typically requires limited skills or education and often involves routine tasks or manual labor.

Innocence Project

A legal organization committed to exonerating wrongly convicted people through DNA testing and reforming the criminal justice system to prevent future injustice.

Exoneration

The act of officially clearing someone from blame or fault, particularly in a legal context.