Question
The LOL Company had the following items in its complex capital structure at December 31, 2020: Preferred stock, $8 par value, $1 dividend, 10,000 shares
The LOL Company had the following items in its complex capital structure at December 31, 2020:
Preferred stock, $8 par value, $1 dividend, 10,000 shares issued and outstanding.
Common stock, $5 stated value, 40,000 shares issued on July 1, 2019.
Additional paid-in capital, $40,000.
Retained earnings, $317,000.
Treasury stock, common (bought back in 2019 at cost of $7 per share), $56,000.
Net income for 2020, $138,000.
Stock options outstanding since January 2, 2020, representing 14,000 potential common shares.
When the options are available to be exercised in 2023, the exercise price will be $9 per share. The cash that would hypothetically be collected at the potential exercise of the options would permit LOL to acquire 6,000 shares of treasury stock. What Basic and Diluted earnings per share would The LOL Company report for 2020?
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Business Analytics
Authors: Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann
5th Edition
0357902211, 978-0357902219
