On January 1, 2014, Jerry Co

question 4

Essay

On January 1, 2014, Jerry Co. had 25,000 shares of common stock outstanding. On April 1, 2014 it had a 10% stock dividend. On October 1, 2015 it had a 4:1 stock split.
Required:
a.Determine the weighted average common stock outstanding used in the basic earnings per share computation at 12/31/2014.
b.Determine the weighted average common stock outstanding used in the basic earnings per share computation at 12/31/2015.
c.Jerry will be issuing comparative financial statements for 2014 and 2015. What number of shares should be used in the earnings per share computation for 2014 and 2015? Why?

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Definitions:

Cost of Goods Sold

The financial outlays directly associated with the production of a company's sold merchandise.

Variable Administrative Expense

Expenses that vary in direct proportion to changes in an organization's activity level, such as sales commissions.

Traditional Format Income Statement

A financial statement that shows a company's revenues, expenses, and profits, typically starting with sales and subtracting cost of goods sold and other expenses.

Merchandise Inventory

The total value of goods held by a company for the purpose of resale.