Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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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