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:

ATC

Stands for Average Total Cost, which is the total cost of production (fixed plus variable costs) divided by the number of units produced.

Economic Profits

A reiteration emphasizing the calculation that includes total revenues minus total costs, where total costs consider both the explicit and implicit costs.

Competitive Price-searcher Market

A market structure where firms have some degree of market power, enabling them to set prices above marginal cost, but must consider competitor prices to attract consumers.