In its December 31, 20X0, balance sheet, Castle, Inc. (a fictional company), reported 400,000 issued shares of

Question:

In its December 31, 20X0, balance sheet, Castle, Inc. (a fictional company), reported 400,000 issued shares of common stock and 50,000 shares of treasury stock. The 20X0 annual report also reported 100,000 exercisable incentive stock options. Each option allows the holder to acquire one share of common stock for $18 per share. All of the options were outstanding at the end of 20X1. On August 1, 20X1, Castle purchased 25,000 shares of treasury stock. The average market price of the common stock during 20X1 was $23 per share, and the December 31, 20X1, price was $28. Castle’s net income for the year ended December 31, 20X1, was $1,100,000.


Required:

1. Compute Castle’s basic EPS for the year ended December 31, 20X1. Round to the nearest cent.

2. Compute Castle’s diluted EPS for the year ended December 31, 20X1. There are no antidilutive securities. Round to the nearest cent.

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Financial Reporting And Analysis

ISBN: 9781260247848

8th Edition

Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer

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