Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2011. Additional Information:

Question:

Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2011.

Additional Information:

Common shares outstanding at Jan. 1, 2011 ............ 80,000

Incentive stock options (vested in 2010) outstanding throughout 2011 . 24,000

(Each option is exercisable for one common share at an exercise price of $37.50)

During the year, the market price of Stanley's common stock averaged $45 per share.

On Aug. 30 Stanley sold 15,000 common shares.

Stanley's only debt consisted of $50,000 of 10% short term bank notes.

The company's income tax rate is 40%.

Required:

Compute Stanley's basic and diluted earnings per share for the year ended December 31, 2011.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...