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# Weighted average common shares outstanding, basic, diluted EPS

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I am having problems with calculating the weighted average common shares outstanding.

I'm also having trouble with what to do with the cumulative convertible stock and the stock options. I know that there should be a formula for this but I can't find it anywhere.

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18. For the year ended December 31, 2008, Oliver Company should report interest revenue from the McGee Co. bonds of:
A) \$42,392.
B) \$41,409.
C) \$41,368.
D) \$40,000.

Use the following to answer questions 19-20:
Assume that the following data relative to Eddy Company for 2007 is available:
Net Income \$2,100,000

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

8% Cumulative Convertible Preferred Stock
Sold at par, convertible into 200,000 shares of common \$1,000,000

Stock Options
Exercisable at the option price of \$25 per share. Average market price in 2007, \$30 ... 60,000 shares

19. What is the basic earnings per share for 2007. (Round to two decimals places.)
20. What is the diluted earnings per share for 2007. (Round to two decimals places.)

#### Solution Preview

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18. For the year ended December 31, 2008, Oliver Company should report interest revenue from the McGee Co. bonds of:
A) \$42,392.
B) \$41,409.
C) \$41,368.
D) \$40,000.

\$376,100 Ã— .055 = \$20,686
(\$376,100 + \$686) Ã— .055 - \$20,723; \$20,686 + \$20,723 = \$41,409

Use the following to answer questions 19-20:

Assume that the following data relative to Eddy Company for 2007 is available:
Net Income \$2,100,000

Transactions in Common ...

#### Solution Summary

The weighted average common shares outstanding, basic and diluted EPS.

\$2.49