The following information is used in answering questions 14-20. Dr. Pepper Inc. has gathered the following information to be used in developing its Earnings-Per-Share presentation for its annual financial statements dated December 31, YR11. Net Income for the year is $6,000 and the income tax rate is 25%. Other relevant information for the YR11 year includes:

Common Stock: $2 par value common stock; 5,000 shares authorized; 2,000 shares issued and 1,800 shares Stock: outstanding at 12-31-YR11. The company began the YR11 year with 600 shares issued and outstanding. On 5-1-YR11 an additional 400 shares were issued for cash. On 9-1-YR11, the company issued a 2-for-1 stock split. Finally, on 11-1-YR11 the company purchased 200 shares to be held as treasury stock.

Convertible Bonds: $2,000 of 5% convertible bonds are outstanding at 12-31-YR11. The 10 year bonds are dated 7-1-YR10, Bonds: were issued at 98 on 9-1-YR10, and pay interest each year on July 1. Beginning on 12-1-YR14 each $1,000 bond is convertible into common stock according to the following schedule.

Year of Conversion	Conversion Rate
YR14 to YR16	10 common shares for each bond
YR17 and beyond	20 common shares for each bond

As of 12-31-YR11 none of these bonds have been converted to common stock. Also, for the year ended 12-31-YR11 the company recorded $4 of bond discount amortization related to these bonds.

Options: A total of 120 stock options with an exercise price of $4 were outstanding at 12-31-YR11. Upon payment of $4, each option is convertible into one share of common stock. The options were originally issued on 6-1-YR11 and are exercisable between 10-1-YR11 and 12-31-YR16. Note: As of 12-31-YR11 none of these options have been converted to common stock.

Preferred: $100 par value, 4% cumulative preferred stock; 1,000 shares authorized; 400 shares issued and 300 shares Stock: outstanding at 12-31-YR11.

This issue of preferred stock is not convertible into common stock. This preferred stock was issued during the year ended 12-31-YR05. Dividends were last declared and paid for the year ended 12-31-YR09. Dividends for both YR10 and YR11 have not been declared or paid.

Market Prices: During YR11 the common stock price averaged $6, and ended at $8 per share on 12-31-YR11. of Securities: Also, during YR11 the market price of the options averaged $4, and ended at $6 per option on 12-31-YR11.

14. For the year ended December 31, YR11 the weighted average common shares outstanding was (round to nearest whole share):

a. 1,167 b. 1,700 c. 1,800 d. 2,000 e. None of the above

15. What amount of preferred dividends will be used in computing the numerator of Simple EPS?

a. $0 b. $1,600 c. $2,400 d. $3,200 e. None of the above

16. What amount will be reported as Simple EPS for the year ended 12-31-YR11 (round to nearest penny)?

To avoid potential carryforward errors assume your answer to question #14=1,600 common shares and your answer to question #15=$2,400.

a. $0.38 b. $2.00 c. $2.25 d. $3.75 e. None of the above

17. In the preliminary calculation of Diluted EPS what is the dollar amount of the adjustment to Income Available for Common (numerator effect) for the convertible bonds? (Do not consider whether the bonds are dilutive, round to nearest dollar.)

a. $22 b. $28 c. $72 d. $78 e. None of the above