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Vent, Inc. reported net income of $770,000 for 2018. Vent sold 15,000 shares of treasury stock acquired in a previous year on July 1 and 15,000 new shares on November 1. At year-end, 180,000 shares were outstanding. Vent had 20,000 shares of $100 par value 7% preferred stock outstanding all year. Vent paid dividends to the preferred shareholders. The weighted average number of common shares used to compute earnings per share for 2018 is

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Answer:

The weighted average number of shares used to compute earnings per share for 2018 is 160,000

Explanation:

At the beginning of the year Vent would have had 180,000 shares less the two new 15,000 shares newly issued(180,000-15,000-15000)=150,000

Outstanding common stock at beginning of the year 150,000*12/12=150,000

Shares issued on July 1      15,000*6/12                                                =7500

Shares issued on November 1   15,000*2/12                                         =2,500

Weighted average number of shares                                                     160,000

The number with which to compute earnings per share is 160,000 shares as shown above.

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