1 The following applies to the Dunbar Corp for 2010 Shares Transactions in Common Shares Change Outstanding 1 1 10, Beginning Shares Outstanding 1,000,000 3 1 10, Purchase of Treasury Shares (60,000) 940,000 6 1 10, Stock Split 2 for 1 940,000 1,880,000 11 1 10, Issuance of Additional Shares 120,000 2,000,000 Outstanding Stock Options (Granted in 2008) Of the 70,000 outstanding options granted in 2008, 60,000 shares are exercisable at the option price of $25 per share and 10,000 shares are exercisable at the option price of $35 per share Average 2010 market price was $30 per share (Market price and option price already adjusted for stock split) Convertible Bonds (Issued December 1, 2010) $5 million of 4 bonds convertible to 400,000 shares of common stock Net income in 2010 was $3,200,000 Dunbar s tax rate is 35 A) Compute the basic earnings per share for 2010 B) Compute the diluted earnings per share for 2010 C) Let s assume Dunbar Corp made a net loss of $3 2 million in 2010 instead of a net income, compute the basic and diluted earnings per share 1 The following applies to the Dunbar Corp for 2010 Transactions in Common Shares 1 1 10, Beginning Shares Outstanding 3 1 10, Purchase of Treasury Shares 6 1 10, Stock Split 2 for 1 11 1 10, Issuance of Additional Shares Change Shares Outstanding (60,000) 940,000 120,000 1,000,000 940,000 1,880,000 2,000,000 Outstanding Stock Options (Granted in 2008) Of the 70,000 outstanding options granted in 2008, 60,000 shares are exercisable at the option price of $25 per share and 10,000 shares are exercisable at the option price of $35 per share Average 2010 market price was $30 per share (Market price and option price already adjusted for stock split) Convertible Bonds (Issued December 1, 2010) $5 million of 4 bonds convertible to 400,000 shares of common stock Net income in 2010 was $3,200,000 Dunbar's tax rate is 35 A) Compute the basic earnings per share for 2010 B) Compute the diluted earnings per share for 2010 C) Let's assume Dunbar Corp made a net loss of $3 2 million in 2010 instead of a net income, compute the basic and diluted earnings per share

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1. The following applies to the Dunbar Corp for 2010: Shares Transactions in Common Shares Change Outstanding 1/1/10, Beginning Shares Outstanding 1,000,000 3/1/10, Purchase of

1. The following applies to the Dunbar Corp for 2010: Shares Transactions in Common Shares Change Outstanding 1/1/10, Beginning Shares Outstanding 1,000,000 3/1/10, Purchase of Treasury Shares (60,000) 940,000 6/1/10, Stock Split 2-for-1 940,000 1,880,000 11/1/10, Issuance of Additional Shares 120,000 2,000,000 Outstanding Stock Options (Granted in 2008) Of the 70,000 outstanding options granted in 2008, 60,000 shares are exercisable at the option price of $25 per share and 10,000 shares are exercisable at the option price of $35 per share. Average 2010 market price was $30 per share. (Market price and option price already adjusted for stock split). Convertible Bonds (Issued December 1, 2010) $5 million of 4% bonds convertible to 400,000 shares of common stock. Net income in 2010 was $3,200,000. Dunbar?s tax rate is 35% A) Compute the basic earnings per share for 2010. B) Compute the diluted earnings per share for 2010. C) Let?s assume Dunbar Corp made a net loss of $3.2 million in 2010 instead of a net income, compute the basic and diluted earnings per share. image text in transcribed

1. The following applies to the Dunbar Corp for 2010: Transactions in Common Shares 1/1/10, Beginning Shares Outstanding 3/1/10, Purchase of Treasury Shares 6/1/10, Stock Split 2-for-1 11/1/10, Issuance of Additional Shares Change Shares Outstanding (60,000) 940,000 120,000 1,000,000 940,000 1,880,000 2,000,000 Outstanding Stock Options (Granted in 2008) Of the 70,000 outstanding options granted in 2008, 60,000 shares are exercisable at the option price of $25 per share and 10,000 shares are exercisable at the option price of $35 per share. Average 2010 market price was $30 per share. (Market price and option price already adjusted for stock split). Convertible Bonds (Issued December 1, 2010) $5 million of 4% bonds convertible to 400,000 shares of common stock. Net income in 2010 was $3,200,000. Dunbar's tax rate is 35% A) Compute the basic earnings per share for 2010. B) Compute the diluted earnings per share for 2010. C) Let's assume Dunbar Corp made a net loss of $3.2 million in 2010 instead of a net income, compute the basic and diluted earnings per share