In this simulation, you are asked to address questions related to the accounting for stock options and earnings per share computations. Prepare responses to allparts.

KWW Professional_Simulation Stock Options and EPS Time Remaining 3 hours 50 minutes Unsplit Split Horiz Split Vertical Spreadsheet Calculator Exit Explanation Financial Statements Resources Situation Directions As auditor for Banquo & Associates, you have been assigned to check Duncan Corporation's computation of earnings per share for the current year. The controller, Mac Beth, has supplied you with the following computations. Net income $3,374,960 Common shares issued and outstanding: Beginning of year End of year Average Earnings per share: $3,374,960 1,242,500 1,285,000 1,200,000 1,242,500 $2.72 per share You have developed the following additional information. 1. There are no other equity securities in addition to the common shares. 2. There are no options or warrants outstanding to purchase common shares. 3. There are no convertible debt securities. 4. Activity in common shares during the year was as follows. Outstanding, Jan. 1 Treasury shares acquired, Oct. 1 1,285,000 (250,000) 1,035,000 165,000 1,200,000 Shares reissued, Dec. 1 Outstanding, Dec. 31 Explanation Financial Statements Directions Situation Resources On the basis of the information above, do you agree with the controller's computation of earnings per share for the year? If you disagree, prepare a revised computation of earnings per share. Situation Explanation Financial Statemente Directions Resources Assume the same facts as those presented above, except that options had been issued to purchase 140,000 shares of common stock at $10 per share. These options were outstanding at the beginning of the year, and none had been exercised or canceled during the year. The average market price of the common shares during the year was $25, and the ending market price was $35. What earnings per share amounts will be reported?