Compute the diluted earnings per share for 2007


Transactions in Common Shares Change Cumulative
Jan. 1, 2007, Beginning number 700,000
Mar. 1, 2007, Purchase of treasury shares (60,000) 640,000
June 1, 2007, Stock split 2-1 640,000 1,280,000
Nov. 1, 2007, Issuance of shares 120,000 1,400,000

8% Cumulative Convertible Preferred Stock
Sold at par, convertible into 200,000 shares of common
(after adjustment for stock split). 100,000 shares

Stock Options
Exercisable at the option price of $25 per share. Average
market price in 2007 was $30 (market price and option price
adjusted for split). 60,000 shares


Instructions
(a) Compute the basic earnings per share for 2007. (Round to the nearest penny)

(b) Compute the diluted earnings per share for 2007. (Round to the nearest penny)


Assume that the following data relative to Eddy Company for 2007 is available:

 

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Accounting Basics: Compute the diluted earnings per share for 2007
Reference No:- TGS062713

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