Question
On 1/1/2021Steel Corp. has 600,000 shares of common stock issued and outstanding and 300,000 shares of 8%, noncumulative,nonconvertible, preferred stock issued and outstanding. February 28thSteel
On 1/1/2021Steel Corp. has 600,000 shares of common stock issued and outstanding and 300,000 shares of 8%, noncumulative,nonconvertible, preferred stock issued and outstanding. February 28thSteel sold 60,000 shares of common stock.
May 15thSteel issued a 4% common stock dividend.
July 1stSteel repurchased and then retired 2,000 shares of common stock.
December 15thSteel paid cash dividends of $400,000 to common and $75,000 to preferred.
Net income for 2021was $2,100,000, the companys tax rate is 40%, and the average market price of its common sharesfor the year is $32 per share.As part of an incentive compensation plan, Steel granted incentive stock options to division managers in 2019, 2020, and 2021. Each option permits the hold tobuy one share of common stock at an exercise price equal to the market price on the date of the grant.
Dated Granted Share Price Date Exercisable Options Granted
12/31/2019 $24 1/1/2021 8,000
12/31/2020 $33 1/1/2022 3,000
12/31/2021 $32 1/1/2023 6,500
Compute Steels Basic and Diluted Earnings per Share for the year ended 12/31/2021
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