so we carry back the splits to prior years?? I thought we take it ony to the begining of the year

These little details make me so confused....

This is my way of doing this problem:

Step 1: 100,000 * (3/12) = 25,000 outstanding until April 1

April 1 sold 20,000 treasury so (100000+20000) total outstanding

step 2: 120000* (3/12) = 30,000 outstading until July 1

Now July 1  2-for-1 stock split

step 3: 120000*2= 240,000 * (6/12) = 120,000 outstading

However there is a twist, anytime you have stock split, you have to apply that retroactively

So 25000*2 = 50000 (from step 1)retroactive adj

30000*2 = 60,000 (from step 2) retroactive adj

120000 ( from step 3)

Total outstanding = 50,000+60,000+120,000= 230,000

NI = 410000/230000 =1.78 (2001)

for year 2000, simply take 100,000*2 = 200000

350,000/200,000 = 1.75 EPS fro (2000)

Please ignor my spelling error as I am at work and no time to check spelling.

Hope this helps.

Yes, you carry back splits to prior years when F/S are being presented comparatively.  As stated above, stock splits are treated retroactively, so since you are presenting last year's F/S, you need to apply the split all the way back to last year as well.