Answer (C) is correct . The weighted-average of shares outstanding during the year is used in the EPS denominator. Shares issued in a stock dividend are assumed to have been outstanding as of the beginning of the earliest accounting period presented. Thus, the 75,000 shares issued on March 1 are deemed to have been outstanding on January 1. The EPS denominator equals 235,000 shares {[150,000 ¡Á (12 months ¡Â 12 months)] + [75,000?¡Á (12 months ¡Â 12 months)] + [60,000 ¡Á (2 months ¡Â 12?months)]
Answer (A) is incorrect because This figure is the weighted-average number of shares if the stock dividend is not treated as retroactive.
Answer (B) is incorrect because This figure ignores the November 1 issuance.
Answer (D) is incorrect because This figure is the year-end number of outstanding shares.
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