When I search for this there are two different (completely different answers) on

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When I search for this there are two different (completely different answers) on Chegg. I really would love to find the correct answer. One of the other solutions has really simple calculations and one does not. Is $2.8124 correct for the first question? And $2.518 for the second question? The other answer... also on Chegg shows $2.47 as the first and answer and $2.08 as the second answer.

As one of the auditors at Banquo & Associates, you have been assigned to check Duncan Corporation’s computation of earnings per share for the current year. The controller, Mac Beth, has supplied you with the following computations.

Net income

$3,374,960

Common shares
issued and outstanding:

Beginning of year

1,285,000

End of year

1,200,000

Average

1,242,500

Earnings per share:

$3,374,960

= $2.72 per share

1,242,500

You have developed the following additional information.

There are no other equity securities in addition to the common shares.

There are no options or warrants outstanding to purchase common shares.

There are no convertible debt securities.

Activities in common shares during the year were as follows.

Outstanding, Jan. 1

1,285,000

Treasury shares acquired, Oct. 1

250,000

Shares reissued, Dec. 1

165,000

Outstanding, Dec. 31

1,200,000

Questions:

On the basis of the information above, do you agree with the controller’s computation of earnings per share for the year? If you disagree, prepare a revised computation of earnings per share.

Assume the same facts as those presented above, except that options had been issued to purchase 140,000 shares of common stock at $10 per share. These options were outstanding at the beginning of the year, and none had been exercised or canceled during the year. The average market price of the common shares during the year was $25, and the ending market price was $35. What earnings per share amounts will be reported?

Net income

$3,374,960

Common shares
issued and outstanding:

Beginning of year

1,285,000

End of year

1,200,000

Average

1,242,500

Earnings per share:

$3,374,960

= $2.72 per share

1,242,500

Explanation / Answer

As there we can see that theere s no chanege in the number of shares till october 1st. that means till sep 3th the wole number of sheres exist. only then the tust taken the shares and re issued on 1 December so there is an non operation of 250000 shares for two months, and 85000 shares ( difference of 250000-165000=85000) of three moths.

so we can say there is a time gap icurred on th opeation of these shares.

so 250000 shares or 2 months operation will be=250000*2/12=41667

balance 85000 shares for 1 month operation = 85000*1/12=7083

total number of shares not operating= 41667+7083=48750

there for the dialuted number of shares for calculating EPS will=1285000-48750=1236250

There for EPS Will be= 3374960/1236250=2.7299

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