Explore BrainMass

Explore BrainMass

    Earnings per share - basic and diluted

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Assume that the following data relative to Eddy company for 2004 is available:

    Net Income: $1,400,000

    Transactions in Common shares change cumulative
    1/1/04, beginning number 500,000
    3/1/04 (60,000) 440,000
    6/1/04 440,000 880,000
    11/1/04, Issuance of shares 120,000 1,000,000

    8% cumulative convertible preferred stock
    sold at par, convertible into 200,000 shares
    of common (adjusted for split) $1,000,000

    Stock options
    Exercisable at the option price of $25 per share.
    Average market price in 2004, $30
    (market price and option price adjusted for split) 600,000 shares

    Instructions:
    (A) compute the basic earnings per share for 2004. (Round to the nearest penny.)
    (B) compute the diluted earnings per share for 2004. (Round to the nearest penny.)

    © BrainMass Inc. brainmass.com June 3, 2020, 10:41 pm ad1c9bdddf
    https://brainmass.com/business/accounting/earnings-per-share-basic-and-diluted-244414

    Solution Summary

    The solution explains how to calculate the basic and diluted earnings per share

    $2.19

    ADVERTISEMENT