Problem:

On Dec 31, 2007, Jamfest Travel Inc. had 450,000 shares of no-par common stock issued and outstanding. All shares were sold for $7.50. On June 30 2008, the firm issued an additional 135,000 shares for $7 per share. The 2008 income was $319,200. On Sept 1 2008 a 15 percent stock dividend was issued to all common shareholders. On Oct 1 2009, 60,000 shares were reacquired as treasury shares. Net income in 2009 was $278,063.

Required:

Question 1: Compute the weighted average number of common shares outstanding for 2008 and 2009 that should be shown on comparative statements at the end of 2009

Question 2: Compute the basic earnings per share in 2008 and 2009 to be reported on comparative statements at the end of 2009

Note: Be sure to show how you arrived at your answer.