Solution
David answered on
Dec 24 2021
Answer
As auditor for Banquo & Associates, you have been assigned to check Duncan
Corporation’s computation of earnings per share for the cu
ent year. The
controller, Mac Beth, has supplied you with the following computations.
Net income $3,374,960
Common shares issued and outstanding:
Beginning of yea
1,285,000
End of yea
1,200,000
Average
1,242,500
Earnings per share:
$3,374,960 = $2.72 per share
1,242,500
You have developed the following additional information.
There are no other equity securities in addition to the common shares.
There are no options or wa
ants outstanding to purchase common shares.
There are no convertible debt securities.
Activity in common shares during the year was as follows.
Outstanding, Jan. 1 1,285,000
Treasury shares acquired, Oct. 1 1,035,000
Shares reissued, Dec. 1 1,165,000
Outstanding, Dec. 31 1,200,000
Questions:
On the basis of the information above, do you agree with the controller’s
computation of earnings per share for the year? If you disagree, prepare a revised
computation of earnings per share
Assume the...