Baldwin Company had 40,000 shares of common stock outstanding on January 1, 2018. On April 1, 2018, the company issued 20,000 shares of common stock. The company had outstanding fully vested incentive stock options for 10,000 shares exercisable at $10 that had not been exercised by its executives. The average market price of common stock for the year was $12. What number of shares of stock (rounded) should be used in computing diluted earnings per share?
A) 65,000.
B) 56,667.
C) 55,000.
D) 46,667.

Question

Quizplus · Accepted Answer

40,000 + (20,000 × 9/12) + (10,000 - 8,333*) = 56,667
*(10,000 × $10) ÷ $12 = 8,333

Baldwin Company Had 40,000 Shares of Common Stock Outstanding on January