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swisha2k
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Joined: 29 Apr 2009
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Posts: 30

Posted: 23 Jun 2009 at 22:42 \| IP Logged

At December 31, 2006, the Murdock Company had 150,000 shares of common stock issued and outstanding. On April 1, 2007, an additional 30,000 shares of common stock were issued. Murdock’s net income for the year ended December 31, 2007, was $517,500. During 2007, Murdock declared and paid $300,000 in cash dividends on its nonconvertible preferred stock. The basic earnings per common share, rounded to the nearest penny, for the year ended December 31, 2006, should be
A. $3.00. B. $2.00. C. $1.45. D. $1.26.

I'm leaning toward D... would that be correct?

asp87
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Joined: 21 Jun 2009
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Posts: 138

Posted: 23 Jun 2009 at 23:39 \| IP Logged

I'd agree that the answer is D, assuming the question is asking about 2007, not 2006.

(517,500 - 300,000)/172,500 = 1.26

WACSO= (150,000 * 3/12) + (180,000 * 9/12) = 172,500

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