Calculate Earnings Per Share (EPS) with Stock Issuance

To calculate the earnings per share (EPS) of common stock for 2018, we need to divide the income applicable to common stock by the weighted average number of common shares outstanding during the year. Here's a step-by-step calculation:

1. Calculate the Weighted Average Number of Common Shares Outstanding:

• Number of shares outstanding on January 1: 607,000* Number of shares issued on July 1: 898,000

The weighted average takes into account the period each share count was outstanding:

Weighted average number of common shares outstanding = (Number of shares outstanding on January 1 * Number of months) + (Number of shares issued on July 1 * Number of months)Weighted average number of common shares outstanding = (607,000 * 12) + (898,000 * 6)Weighted average number of common shares outstanding = 7,284,000 + 5,388,000Weighted average number of common shares outstanding = 12,672,000

2. Calculate the Earnings Per Share:

Earnings per share = Income applicable to common stock / Weighted average number of common shares outstandingEarnings per share = $2,944,000 / 12,672,000Earnings per share ≈ $0.2321

Rounded to the nearest penny, the earnings per share of common stock for 2018 is $0.23.

Therefore, none of the provided answer choices (a, b, c, d) are correct. The correct EPS is $0.23.