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M131BCH16PRACTICEPROBLEMSEPSwithsolutions

Intermediate Accounting

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M131B – INTERMEDIATE ACCOUNTING CHAPTER 16 EARNINGS PER SHARE PRACTICE PROBLEMS NAME__________________________________ ID #____________________________________ 1. At December 31, 2007, Norbett Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2007. Net income for the year ended December 31, 2007, was $1,020,000. What should be Norbett's 2007 earnings per common share, rounded to the nearest penny? a. $2.02 b. $2.55 c. $2.40 d. $2.27 $1,020,000 c ———————————— = $2.40. 3 400,000 + (100,000 × —- ) 12 2. Loeb Co. had 600,000 shares of common stock outstanding on January 1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock on September 1, and issued 54,000 shares on November 1. The weighted average shares outstanding for the year is 600,000 + (126,000 × 8/12) – (63,000 × 4/12) + (54,000 × 2/12) = 672,000.
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