Question: Exercise 19-20 (Static) EPS; shares issued; stock options [LO19-6, 19-7, 19-8, 19-9] Stanley Depa...

Exercise 19-20 (Static) EPS; shares issued; stock options [LO19-6, 19-7, 19-8, 19-9]

Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2021. Additional Information:

Common shares outstanding at Jan. 1, 2021	80,000
Incentive stock options (vested in 2020) outstanding throughout 2021	24,000
(Each option is exercisable for one common share at an exercise price of $37.50.)
During the year, the market price of Stanleys common stock averaged $45 per share.
On Aug. 30, Stanley sold 15,000 common shares.
Stanleys only debt consisted of $50,000 of 10% short-term bank notes.
The companys income tax rate is 25%.

Required:

Compute Stanleys basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Do not round intermediate calculations.)

basic EPS = Net income available for common stockholder/weighted average no of common stock outstanding
($ 720,000/ 85,000)	$8.47
Working Note
net income	$720,000
weighted no of common stock outstanding (80,000*12/12 + 15,000*4/12)	85,000

stock option
Incremental shares = 24,000 - (24,000*$37.50/$45)	4,000
diluted EPS = $720,000/(85,000+4,000)