Throwback Corporation reported net income of $600,000 in 2020 and had 300,000 shares of common stock ($1 par value) outstanding throughout the year. Also outstanding all year were 60,000 options. Each option allows the holder to purchase on share of common stock at $10 per share. The average market price of the stock during the year was $16.

(a) Compute diluted earnings per share.

(b) Compute diluted earnings per share assuming the same facts above, except that the options were issued on September 1 of the current year (2020).

Problem 1 Diluted Earnings Per Share with Options Throwback Corporation reported net income of $600,000 in 2020 and had 300,000 shares of common stock (S1 par value) outstanding throughout the year. Also outstanding all year were 60,000 options. Each option allows the holder to purchase one share of common stock at $10 per share. The average market price of the stock during the year was $16. (a) Compute diluted earnings per share. (b) Compute diluted earnings per share assuming the same facts above, except that the options were issued on September 1 of the current year (2020)