On February 28, 2021, Dow sold 56,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $2,400,000. The income tax rate is 25%. Also, as a part of a 2020 agreement for the acquisition of Merrill Cable Company, another 29,000 shares (already adjusted for the stock dividend) are to be issued to former rrill shareholders on December 31, 2022, if Merrill's 2022 net income is at least $560,000. In 2021, Merrill's net income was $690,00. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Options Granted (adjusted for the stock dividend) 13,000 8,000 11,500 Share Price $ 18 $ 27 $ 26 Date Granted December 31, 2019 December 31, 2020 December 31, 2021 The stock options issued in 2019 were not exercised in 2020 or 2021. The market price of the common stock averaged $26 per share during 2021. On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). Required: Compute Dow's hacir and dilı ted earnings ner share for the vear ended Decemher 31 2021 (Enter vour ansuere in thoICAnde

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Chapter1: Financial Statements And Business Decisions
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Options Granted
(adjusted for the stock dividend)
Date Granted
Share Price
December 31, 2019
December 31, 2020
December 31, 2021
13,000
8,000
11,500
$18
$ 27
$ 26
The stock options issued in 2019 were not exercised in 2020 or 2021.
The mar t price of the common stock averaged $26 per share during 2021.
On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common
shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands.
Round "Earnings per share" answers to 2 decimal places. Do not round intermediate calculations)
Denominator
Earnings per share
%3D
Numerator
%3D
Dow's basic
%3D
Dow's diluted
Transcribed Image Text:Options Granted (adjusted for the stock dividend) Date Granted Share Price December 31, 2019 December 31, 2020 December 31, 2021 13,000 8,000 11,500 $18 $ 27 $ 26 The stock options issued in 2019 were not exercised in 2020 or 2021. The mar t price of the common stock averaged $26 per share during 2021. On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Round "Earnings per share" answers to 2 decimal places. Do not round intermediate calculations) Denominator Earnings per share %3D Numerator %3D Dow's basic %3D Dow's diluted
On February 28, 2021, Dow sold 56,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were
retired on July 1. Dow's net income for the year ended December 31, 2021, was $2,400,000. The income tax rate is 25%. Also, as a part
of a 2020 agreement for the acquisition of Merrill Cable Company, another 29,000 shares (already adjusted for the stock dividend) are
to be issued to former Merrill shareholders on December 31, 2022, if Merrill's 2022 net income is at least $560,000. In 2021, Merrill's
net income was $690,000.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current
and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to
market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted
and common share prices follows:
Options Granted
(adjusted for the stock dividend)
13,000
8,000
11,500
Share Price
$ 18
$ 27
$ 26
Date Granted
December 31, 2019
December 31, 2020
December 31, 2021
The stock options issued in 2019 were not exercised in 2020 or 2021.
The market price of the common stock averaged $26 per share during 2021.
On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common
shares (adjusted for the stock dividend).
Required:
Compute Dow's hasic and diluted earnings ner share for the vear endedl December 31. 2021 (Enter vour answere in thousands
Transcribed Image Text:On February 28, 2021, Dow sold 56,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $2,400,000. The income tax rate is 25%. Also, as a part of a 2020 agreement for the acquisition of Merrill Cable Company, another 29,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2022, if Merrill's 2022 net income is at least $560,000. In 2021, Merrill's net income was $690,000. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Options Granted (adjusted for the stock dividend) 13,000 8,000 11,500 Share Price $ 18 $ 27 $ 26 Date Granted December 31, 2019 December 31, 2020 December 31, 2021 The stock options issued in 2019 were not exercised in 2020 or 2021. The market price of the common stock averaged $26 per share during 2021. On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). Required: Compute Dow's hasic and diluted earnings ner share for the vear endedl December 31. 2021 (Enter vour answere in thousands
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