1. Happy Valley Inc. began the year with 100,000 shares of common stock outstanding.

The following events occurred during the year relating to common stock:

• March 1—2-for-1 stock split

• June 1—10% stock dividend

• August 1—Sold 10,000 additional shares of stock

• November 1—2-for-1 stock split

What was the weighted-average number of shares outstanding for the year?

(a) 390,833 shares

(b) 411,667 shares

(c) 438,333 shares

(d) 448,333 shares

2. Sunshine Company began the year with 10,000 shares of common stock outstanding.

On May 1, the company repurchased 2,000 shares of its own common stock. On November 1, the company performed a 3-for-1 stock split of its outstanding shares. Net income for the year was $17,500. During the year, the company declared and paid $2,500 in preferred stock dividends.

What would the company report as basic earnings per share for the year?

(a) $0.44 per share

(b) $0.58 per share

(c) $0.67 per share

(d) $0.80 per share