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computation of earnings per share for the current year. The controller, Mac Beth, has supplied you with the following computations. Net income...
computation of earnings per share for the current year. The controller, Mac Beth, has suppliedyou with the following computations.Net income $3,374,960Common shares issued and outstanding:Beginning of year 1,285,000End of year 1,200,000Average 1,242,500Earnings per share:You have developed the following additional information.1. There are no other equity securities in addition to the common shares.2. There are no options or warrants outstanding to purchase common shares.3. There are no convertible debt securities.4. Activity in common shares during the year was as follows.Outstanding, Jan. 1 1,285,000Treasury shares acquired, Oct. 11,035,000Shares reissued, Dec. 1 165,000Outstanding, Dec. 31 1,200,000On the basis of the information above, do you agree with the controller’s computation of earningsper share for the year? If you disagree, prepare a revised computation of earnings per shareAssume the same facts as those presented above, except that options had been issued topurchase 140,000 shares of common stock at $10 per share. These options were outstanding atthe beginning of the year, and none had been exercised or canceled during the year. The averagemarket price of the common shares during the year was $25, and the ending market price was $35.What earnings per share amounts will be reported?
