Question

Marigold Corp., has 4210000 shares of common stock outstanding on December 31, 2017. An additional 796000 shares of common stock were issued on April 1, 2018, and 394000 more on July 1, 2018. On October 1, 2018, Marigold issued 20300, $1,000 face value, 8% convertible bonds. Each bond is convertible into 20 shares of common stock. No bonds were converted into common stock in 2018. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively?

5004000 and 5004000

5004000 and 5105500

5405500 and 6205500

5004000 and 5405500

Answer 1

Weighted average number of shares for Basic EPS= (4,210,000 + (796,000*9/12)+(394,000*6/12))

Weighted average number of shares for Basic EPS= 5,004,000

Weighted average number of shares for Diluted EPS= (4,210,000 + (796,000*9/12)+(394,000*6/12)+(20,300*20*3/12))

Weighted average number of shares for Diluted EPS= 5,105,500

So, answer is B.  5004000 and 5105500

You can reach me over comment box if you have any doubts. Please rate this answer