Eller, Inc., had 560,000 shares of common stock issued and outstanding at December 31, 2006. On July 1, 2007, an additional 40,000 shares of common stock were issued for cash. Eller also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the beginning and end of 2007. The average market price of Eller's common stock was $20 during 2007. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2007?
A) 580,000
B) 588,000
C) 608,000
D) 612,000

Question

Quizplus · Accepted Answer

560,000 + (40,000 × 6/12) + [32,000 - (32,000 × $15 ÷ $20)] = 588,000.