Larsen Company had granted 20,000 options to buy one share of common stock at $1

Question

Larsen Company had granted 20,000 options to buy one share of common stock at $10 per share to employees several years ago. The company had net income of $200,000 this year and had 300,000 shares of common stock outstanding the entire year. The average market price per share was $20 and the end of year price was $25. Given only the above information, what are basic and diluted earnings per share respectively for the year? a. $.67 $ .67 b. $.67 $ .65 c. $.65 $.64 d. $.64 $.64 ANS: B

. The following information relates to the Simplex Company for 2008: Net income, $50,000 Common stock, shares outstanding on January 1: 30,000 June 30, 2008, issued 2,000 shares of 8% cumulative convertible preferred stock, $100 par value, each share convertible into 10 shares of common stock. September 30, 2008, issued a 40% stock dividend. What is diluted earnings per share? a. $1.00 b. $.89 c. $.81 d. $.76 ANS: B

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Explanation / Answer

Basic Earning Earnings/ Shares Outstanding 200000/300000 67 Basic Earning per share is $ 67 per share

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