Question
1) Nike had 500,000 shares of common stock and 250,000 shares of non-cumulative preferred stock issued and outstanding at the end of Year 1. On
1) Nike had 500,000 shares of common stock and 250,000 shares of non-cumulative preferred stock issued and outstanding at the end of Year 1. On July 1st, Year 2, Nike issued an additional 100,000 shares of common stock. During Year 2, cash dividends of $50,000 were paid to common stockholders and $100,000 to preferred stockholders. Net income for Year 2 was $430,000. What should Nike report for Year 2 basic earnings per share?
2) Coco Corp. awards 10,000 stock options to its employees. Each option grants the holder the right to purchase one share of stock for $25. The options are exercisable for a period of 4 years, but the employees are fully vested after a service period of 2 years. An option-pricing model indicates that the fair value of each option is $15. What amount of compensation expense should Coco Corp. recognize each year for the award?
3) Agassi Company had a gross profit of $720,000, total purchases of $840,000, and an ending inventory of $480,000 in its first year of operations as a retailer. Agassi's sales in its first year must have been
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