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23 December, 22:06

The Heath Corporation reported net income for 2018 of $177,500. Heath began the year with 100,000 shares of $5 par value common shares outstanding and 2,500 shares of $100 par value 8% preferred shares outstanding. On October 1, Heath sold 10,000 shares of common stock for $6 per share. Heath paid dividends to the common shareholders in December.

The weighted average number of common shares used to compute earnings per share for 2018 is:

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  1. 23 December, 22:09
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    97,500 shares

    Explanation:

    Earnings Per Share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stock

    Calculation of Weighted Average Number of Common Stock:

    Outstanding At Beginning of the year 100,000

    Sold Common Shares October (3/12 * 2,500 shares) (2,500)

    Total 97,500

    Therefore the weighted average number of common shares used to compute earnings per share for 2018 is 97,500 shares.
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