Laurelli Builders (LB) reported the following financial data for year-end 31 December:
Common shares outstanding, 1 January = 2,020,000
Common shares issued as stock dividend, 1 June = 380,000
Warrants outstanding, 1 January = 500,000
Net income = $3,350,000
Preferred stock dividends paid = $430,000
Common stock dividends paid = $240,000
Which Statement about LB is true?
A LB’s basic EPS is $1.12.
B LB’s diluted EPS is equal to or less than its basic EPS.
C The weighted average number of shares outstanding is 2,210,000.
For this Question, I did know how to get the answer, but when I was calculating DEPS, I found the one I got is different to the DEPS in the answer section. The main difference is because I thought that since the common shares issued as stock dividend started on June 1, so I multiple 7/12 to the 380000 in denominator.
Can you explain to me why I shouldn’t multiple 7/12? Thank you!