Problem 16-7

Charles Austin of the controller's office of Martinez Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2018. Austin has compiled the information listed below.

Problem 15-7 Charles Austin of the controller's ofce of Martinez Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2013. Austin has compiled the information listed below. 1. The company is authorized to issue 3,360,000 shares of $10 par value common stock. As of December 31, 2017, 2,090,000 shares had been issued and were outstanding. 2. The per share market prices of the common stock on selected dates were as follows. price per share July 1, 2017 52000 January 1, 2010 21.00 April 1, 2013 25.00 July 1, 2018 11.00 August 1, 2010 10.50 November 1, 2018 900 December 31, 2018 10.00 3. A total of 638,400 shares of an authorized 1,295,000 shares of convertible preferred stock had been issued on July 1, 2017. The stock was issued at its par value of $25.00, and it has a cumulative dividend of $3 per share. The stock is convertible into common stock at the rate of one share of convertible preferred for one share of common. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30. 4. Martinez Corporation is subject to a 40% income tax rate. 5. The aerctax net income for the year ended December 31, 2010, was $11,530,000. The following specific adivies took place during 2018. 1. January 17A 5% common stock dividend was issued, The dividend had been declared on December 1, 2017, to all stockholders of record on December 29, 2017, 2. April 17A total of 417,600 shares of the $3 convertible preferred stock was converted into common stock. The company issued new common stock and retired the preferred stock. This was the only conversion of the preferred stock during 2018. 3. July 17A Zcforal split of the common stock became effective on this date. The board of directors had authorized the split on June 1. 4. August 17A total of 305,000 shares of common stock were issued to aoqulre a factory building. 5. November 1A total of 22,300 shares of common stock were purchased on the open market at $9.00 per share. These shares were to be held as treasury stock and were still in the treasury as of December 31, 2013. 6. Common stock cash dividendsCash dividends to common stockholders were declared and paid as follows. April 15$o.30 per share October 1555010 per share 7. Preferred stock cash dividendsCash dividends to preferred stockholders were declared and paid as scheduled. (a) Determine the number of shares used to compute basic earnings per share for the year ended December 31, 2010. (Round answer to a declnml places, e.g. $1,5im.) Number of shares to compute basic earnings per share (b) Determine the number of shares used to compute diluted earnings per share for the year ended December 31, 2018, (Round answer to a decimal pllces, e.g. 51,500.) Number of shares to compute diluted earnings per share (c) compute the adjusted net income to be used as the numerator in the basic earnings per share calculation for the year ended December 31, 2010. Adjusted net income 5 click if you would like to show Work for this question: W LINK m TEXT By accessing this Question Assistance, you wlll learn whl|e you earn points based on the Polnt Potential Policy set by your instructor