QUESTION 1 On 1/1/10, ABC had 2,600 shares outstanding. On 2/1/10, options were
ID: 2570887 • Letter: Q
Question
QUESTION 1
On 1/1/10, ABC had 2,600 shares outstanding. On 2/1/10, options were exercised which resulted in an additional 400 shares being issued. On 5/1/10, there was a 10% stock dividend. On 9/1/10, ABC issued 1,200 additional shares. On 11/1/10, ABC purchased 400 shares of treasury stock. On 12/1/10, ABC had a 3-for-1 stock split. How many shares did ABC have outstanding at 12/31/10?
12,100 shares
12,200 shares
12,300 shares
12,400 shares
QUESTION 2
ABC has 5,000 options outstanding. Each option gives the option holder the option to buy one share of stock at $8 per share. Assume the market price per share of stock is $10. To calculate diluted EPS, ABC uses the treasury stock method. For the above scenario, the options would be considered:
Dilutive
Antidilutive
Liberal
Conservative
QUESTION 3
On 1/1/10, ABC had 2,600 shares outstanding. On 2/1/10, options were exercised which resulted in an additional 400 shares being issued. On 5/1/10, there was a 10% stock dividend. On 9/1/10, ABC issued 1,200 additional shares. On 11/1/10, ABC purchased 400 shares of treasury stock. On 12/1/10, ABC had a 3-for-1 stock split. How many weighted shares did ABC have outstanding at 12/31/10?
10,790 shares
10,800 shares
10,810 shares
10,820 shares
QUESTION 4
ABC has 5,000 options outstanding. Each option gives the option holder the option to buy one share of stock at $8 per share. Assume the market price per share of stock is $10. To calculate diluted EPS, ABC uses the treasury stock method. For the above scenario, how many shares would increase for ABC when calculating diluted EPS? In other words, how much would the denominator of the EPS equation increase?
500 shares
1,000 shares
1,500 shares
2,000 shares
12,100 shares
12,200 shares
12,300 shares
12,400 shares
Explanation / Answer
1.
Calculate the number of shares outstanding before the stock-split.
Shares outstanding before the stock-split = 4,100
3-for-1 stock-split on 12/1/10 = 4,100 x 3 = 12,300
Therefore, ABC have 12,300 shares outstanding on 12/31/10.
Shares outstanding on 1/1/10 2600 Add: Shares issued on 2/1/10 400 Total 3000 Add: 10% stock dividend (3000 x 10%) 300 Total 3300 Add: Additional shares issued on 9/1/10 1200 Total 4500 Less: Purchase of treasury stock on 11/1/10 -400 Total 4100Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.