1. On January 1, 2015, Nerraw Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 500,000 of its own outstanding shares and retired them.
Instructions
Compute the weighted average number of shares to be used in computing earnings per share for 2015.
2. Nosloc Corp. had $700,000 net income in 2015. On January 1, 2015 there were 200,000 shares of common stock outstanding. On April 1, 20,000 shares were issued and on September 1, Nosloc bought 30,000 shares of treasury stock. There are 30,000 options to buy common stock at $40 a share outstanding. The market price of the common stock averaged $50 during 2015. The tax rate is 40%.During 2015, there were 40,000 shares of convertible preferred stock outstanding. The preferred is $100 par, pays $3.50 a year dividend, and is convertible into three shares of common stock. The preferred stock dividend was declared and paid during 2015. Nosloc issued $2,000,000 of 8% convertible bonds at face value during 2014. Each$1,000 bond is convertible into 30 shares of common stock.
Instructions Compute BASIC and DILUTED earnings per share for 2015. Show all computations.