On December 31, 2015, the Bennett Company had 115,000 shares of common stock iss
ID: 2498836 • Letter: O
Question
On December 31, 2015, the Bennett Company had 115,000 shares of common stock issued and outstanding. On July 1, 2016, the company sold 20,000 additional shares for cash. Bennett's net income for the year ended December 31, 2016, was $580,000. During 2016, Bennett declared and paid $80,000 in cash dividends on its nonconvertible preferred stock. What is the 2016 basic earnings per share? (Round your answer to 2 decimal places.)
Dulce Corporation had 160,000 shares of common stock outstanding during the current year. There were also fully vested options for 13,000 shares of common stock were granted with an exercise price of $20. The market price of the common stock averaged $25 for the year. Net income was $4.3 million. What is diluted EPS? (Round your answer to 2 decimal places.)
Explanation / Answer
Soluton : Basic EPS = net inome - preferred stock dividend/ weighted no.of shares outstanding
weighted no. of shares outstanding= 115000 +20000*6/12 = 13,000
Basic EPS = 580,000 - 80,000/13,000
=$38.46
Dulce corporation
Common stock outstanding = 160,000
When option is excerside, cash flow = 20*13,000 = $26,000
new shares that can be bough from this amount = 1040
dilutrd EPS = net income-preferred dividend /toal number of shares outstanding
=4,300,000/(160,000+1040) =$26.87
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