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At the beginning of the year, Stam Co. had 200,000 shares of common stock issued and outstanding. On March 31, the company issued 40,000 additional shares. On July 1, it declared and distributed a 50% stock dividend and on September 30 repurchased 10,000 shares as treasury stock. What amount of shares should Stam use to calculate basic earnings per share

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abiolataiwo2015

The amount of shares that Stam should use to calculate basic earnings per share is 360,000 share.

Basic earnings per share

Shares outstanding at the beginning of the year          200,000 shares

Add additional shares issued                                          40,000 shares

Total shares outstanding                                                 240,000 shares

(200,000+40,000)

Add 50% stock dividend distributed                               120,000 shares

(50% x 240,000)

Basic earning per share                                                  360,000 shares

(240,000+120,000)

Inconclusion the amount of shares that Stam should use to calculate basic earnings per share is 360,000 share.

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