Presented below if the information related to Starr Company
1. Capital Structure:
a. Preferred stock, 7% cumulative and convertible $10 par, 100,000 shares issued and outstanding. The preferred stock was convertible into 220,000 shares of common stock.
b. Convertible, par 6% bonds. The bonds were issued at face value totaling $300,000 and each $1,000 bond is convertible into 25 shares of common stock.
c. 50,000 stock options outstanding all year. Each option can be used to purchase 1 share of common stock for $30 per share. The average price of common stock during the year was $34 per share and the year-end price was $37 per share.
d. January 1: 600,000 shares authorized common stock $5 par, 90,000 common shares outstanding
April 1: 2-for-1 stock split
June 1: 15,000 shares issued on the common stock
October 1: Reaquired 10,000 common shares as treasury stock
2. Additional information:
Net Income $1,800,000
No dividends declared or paid
Tax rate 25%
Assume the items in a. through c. above have already been adjusted for the stock split. NOTE: Carry out your answer to 4 decimal places.
Required:
a. Calculate the weighted average shares outstanding.
b. Calculate basic earnings per share.
c. Calculated diluted earnings per share.
d. Show me what is required to be disclosed on the income statement for earnings per share.