B) 156.couting diluted uning the yee was nochest price of 25) Januar 201 3) January 1, 2018. Forest Cormoration granted executive stock options to put .000 or its common shares at an exercise price of $7 each. The market price of mmon stock averaged $9 per share during the There was no change in the 4.000 shares of outstanding common stock during the year. The number of shares to be used by Forrest Corp in computing diluted earnings per share for the years A) 150,000 C) 158, 100 D) 177,000 On January 1, 2018, the Bennett Company had 100,000 shares of common stock issued and outstanding. On July 1. 2018, the company sold 20.000 additional shares Bennett's net income for the year ended December 31, 2018, was $650,000. During 2018, Bennett declared and paid $89,000 in cash dividends on its preferred stock. What is the 2018 basic earnings per share (rounded to the nearest cent)? B) 55.10. 26) - nded to the near its preferred During Bennett's net incontred and paid share (round $5.91. the Bennett 1, 2018 brocember dividends can rest Cent) D) $4.68. A) $5.42. 27) Stock options do not affect the calculation of A) Diluted earnings per share. C) Basic earnings per share. B) None of these answers is correct. D) Potential common shares 28) - 28) When we assume conversion of convertible bonds, the numerator in the calculation of diluted earnings per share is increased by: A) The gross amount of interest expense on the bonds. B) The amount of after-tax interest expense on the bonds. C) The additional shares issued assuming conversion of the bonds. D) The numerator is not adjusted. 29) 29) Basic earnings per share is computed using A) A weighted-average of both preferred and common shares. B) The actual number of common shares outstanding at the end of the year. C) Weighted average common shares outstanding for the year. D) The number of common shares outstanding plus potential common shares. 30) 30) In 2018, Ashland Granite discovered that a five-year insurance premium payment of $750,000 at the beginning of 2015 was debited in full to insurance expense in error. Ignoring income taxes, the correcting entry Ashland would make in 2018 (assuming the error was material) includes: A) A credit to retained earnings of $300,000. B) A debit to insurance expense of $300,000 C) A credit to retained earnings of $750,000. D) A debit to retained earnings of $300,000. 31) Lundholm Company purchased a machine for $100,000 on January 1, 2016. Lundholm depreciates machines of this type by the straight-line method over a 10-year period. On January 1. 2018, management determined the useful life of the machine to be a total of five years (not 10 years). What amount should Lundholm record for depreciation expense for during the year 2018? A) $16,000. B) $26,667. C) $10,000. D) $20,000 B-6
