Blue Cab Company had 50,000 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 5,000 shares exercisable at $10 that had not been exercised by its executives. The end-of-year market price of common stock was $13 while the average price for the year was $12. The company reported net income in the amount of $269,915 for 2018. What is the diluted earnings per share (rounded)?

Question

Quizplus · Accepted Answer

$\frac{\$ 269,915}{65,833^{*}}=\$ 4.10$ 50,000 + (20,000 × 9/12) + (10,000 - 4,167*) = 65,833
*(5,000 × $10) ÷ $12 = 4,167 from options

Blue Cab Company Had 50,000 Shares of Common Stock Outstanding