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PLEASE SHOW ALL WORK AND EXPLAIN January 1, 2016, Karev Corporation granted options to purchase 2,100...

PLEASE SHOW ALL WORK AND EXPLAIN

January 1, 2016, Karev Corporation granted options to purchase 2,100 of its common shares at $7 each. The market price of common stock was $10 per share on March 31, 2016, and averaged $10 per share during the quarter then ended. There was no change in the 69,133 shares of outstanding common stock during the quarter ended March 31, 2016. Net income for the quarter was $86,738. The diluted earnings per share for the quarter is $_____________ (Round your answer 2 decimal places

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Answer #1

Formula for calculation of Diluted earnings per Share=

Diluted EPS = (net income – preferred dividends) / (weighted average number of shares outstanding + the conversion of any in-the-money options, warrants, and other dilutive securities)

Since no One Executed the option given to them and outstanding shares were the same as at the beggining so

Diluted EPS Is

= 86738/69133= 1.2546$/share

Round off to 2 decimal places will be 1.25/s

But in case all shares for option are taken then

New number pof outstanding shares will be = (2100/7)+69133=69333 shares

So New Diluted Eps will Be 86738/69333 =1.2510$/share

Round off to 2 decimal places will be 1.25/s

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