Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021
Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Basic and Diluted Earnings Per Share. Lizzow Company is preparing its EPS calculations for the year ended December 31, 2021 and has assembled the following relevant information:
- The company’s average stock price during the year was $25, and its income tax rate was 25%
- Common Stock: 2,000,000 shares, $1 par, outstanding at the beginning of the year
- 4% Convertible and Cumulative Preferred Stock: 50,000 shares, $100 par value, outstanding at the beginning of the year.
- 75,000 common shares were issued on May 1, 2021
- 4% convertible bonds are outstanding that were issued at their $3,000,000 face value. Each $1,000 bond is convertible into 20 shares of common stock.
- The company has 50,000 incentive stock options outstanding at the end of the year. The options are fully vested and have an exercise price of $10 per share.
- Net Income for the year was $5 million.
Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021
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