Datatec, Inc., had 400,000 shares of $20 par common stock and 40,000 shares of $100 par, 6% cumulative, convertible preferred stock outstanding for the entire year ended December 31, 2009. Each share of the preferred stock is convertible into 5 shares of common stock. Datatec's net income for 2009 was $1,680,000. For the year ended December 31, 2009, the diluted earnings per share is a. $2.40. b. $2.80. c. $3.60. d. $4.20. ANS: B

On December 31, 2007, Feterik Company had 7,000 shares of common stock issued and outstanding. On April 1, 2008, an additional 1,000 shares of common stock were issued and on July 1, 500 more shares were issued. On October 1, 2008, Feterik issued 10, $1,000 maturity value, 8% convertible bonds. Each bond is convertible into 40 shares of common stock. No bonds were converted into common stock in 2008. Assuming there are no antidilutive securities, what is the number of shares Feterik should use to compute diluted earnings per share for the year ended December 31, 2008? a. 7,950 b. 8,100 c. 8,150 d. 8,400 ANS: B

Andrews Corporation began business on January 1, 2008. Due to difficulties in beginning operations, the company issued 30 shares of common stock (par $10) on January 1, 2008, to the organizers. Fifteen additional shares were also sold on that date. The following also occurred during the year 2008: February 1 2-for-1 stock split April 1 10 percent stock dividend August 1 5-for-1 stock split December 1 1-for-2 reverse stock split The weighted average number of shares outstanding for 2008 was a. 64.08 shares. b. 146.25 shares. c. 180.00 shares. d. 247.50 shares. ANS: D

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