1. Preferred dividends are subtracted from earnings when computing earnings per share whether or not the dividends are declared or paid if the preferred stock is: a. convertible b. callable c. cumulative d. participating 2. Basic earnings per share ignore: a. all potentially dilutive securities. b. some potentially dilutive securities, but not others. c. dividends declared on noncumulative preferred stock. d. stock splits. . (3 points) Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2015, options were granted for sixty thousand $0.2 par common shares. The exercise price, $5, equals the market price of the common stock on the grant date The options cannot be exercised before January 1, 2018, and expire December 31, 2021. Each option has a fair value of $1 based on an option pricing model. Which is the correct entry to record compensation expense for the year 2015 a Compensation expense 60,000 Paid-in capital stock options 60,000 b Compensation expense 20,000 Common stock - stock options 20,000 c Compensation expense 20,000 Paid-in capital - stock options 20,000 No entry needed due to the compensation cost of these options is zero. d