The weighted average number of common shares, Accounting Basics

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On December 31, 2003, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding. All shares were sold for $7.50. On June 30, 2004, the firm issued an additional 135,000 shares for $7 per share. The 2004 income was $319,200. On Sept 1, 2005, a 15 percent stock dividend was issued to all common shareholders. On Oct 1, 2005, 60,000 shares were reacquired as treasury shares. Net income in 2005 was $278,063.

(1)    Compute the weighted average number of common shares outstanding for 2004 and 2005 that should be shown on comparative statements at the end of 2005.

(2)    Compute the basic earnings per share in 2004 and 2005 to be reported on comparative statements at the end of 2005.


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