Problem 1: At December 31, 20X0, Welsch, Inc., had 500,000 shares of common stock outstanding. On October 1, 20X1, an additional 120,000 shares of common stock were issued for cash. Welsch also had $4,000,000 of 8% convertible bonds outstanding at December 31, 20X1, which are convertible into 100,000 shares of common stock. No bonds were issued or converted into common stock during 20X1. What is the number of shares that should be used in computing basic earnings per share for the year ended December 31, 20X1?
Problem 2: On January 1, 20X3, Whalen, Inc., had 120,000 shares of common stock outstanding. A 10% stock dividend was issued on April 1, 20X3. Whalen issued 40,000 shares of common stock for cash on July 1, 20X3. What is the number of shares that should be used in computing earnings per share for the year ended December 31, 20X3?