1) Marigold Companys net income for 2020 is $54,300. The only potentially dilutive securities outstanding were 840 options issued during 2019, each exercisable for one share at $6. None has been exercised, and 9,900 shares of common were outstanding during 2020. The average market price of Marigolds stock during 2020 was $20.

(a) Compute diluted earnings per share. (Round answer to 2 decimal places, e.g. $2.55.)

(b) Assume the same facts as those assumed for part (a), except that the 840 options were issued on October 1, 2020 (rather than in 2019). The average market price during the last 3 months of 2020 was $20. (Round answer to 2 decimal places, e.g. $2.55.)

2) A portion of the combined statement of income and retained earnings of Wildhorse Inc. for the current year follows.

Income before extraordinary item				$15,090,000
Loss from discontinued operations, net of applicable income tax (Note 1)				1,330,000
Net income				13,760,000
Retained earnings at the beginning of the year				84,780,000
				98,540,000
Dividends declared:
On preferred stock$6.00 per share		$312,000
On common stock$1.75 per share		14,960,000		15,272,000
Retained earnings at the end of the year				$83,268,000

Note 1. During the year, Wildhorse Inc. suffered a major loss from discontinued operations of $1,330,000 after applicable income tax reduction of $1,190,000. At the end of the current year, Wildhorse Inc. has outstanding 8,430,000 shares of $10 par common stock and 52,000 shares of 6% preferred. On April 1 of the current year, Wildhorse Inc. issued 980,000 shares of common stock for $30 per share to help finance the loss from discontinued operations. Compute the earnings per share on common stock for the current year as it should be reported to stockholders. (Round answer to 2 decimal places, e.g. $2.55.)

Wildhorse Inc. Income Statement For the Year Ended December 31 Income Per Share Before Extraordinary Item $ 1.84 Extraordinary Loss 0.16 i $ Net Income /(Loss) 1.68