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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.)

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    Solution Preview

    Please see the attached file for the full Solution.

    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 × .055 = $20,686
    ($376,100 + $686) × .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

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