At the end of 2021, selected records and accounts of Megamoth Corporation reflected the following information:

         Common stock, $5 par, authorized 800,000 shares;

                        issued and outstanding 156,000 shares...........................                $780,000

         There were 100,000 shares of common stock outstanding

                        at the beginning of the year. The company issued

                        25,000 additional shares on April 1, 2021, acquired and

                        retired 5,000 shares July 1, 2021, and declared and issued 

                        30% stock dividend on August 31, 2021.

         Preferred stock, par $20, 9%, cumulative,

                        convertible into common stock on a share for

                        share basis, issued and outstanding 10,000 shares.........                200,000

         Paid-in-capital in excess of par: Common stock...........................                   120,000

         Paid-in-capital in excess of par: Preferred stock...........................                    50,000

         Stock options A outstanding for 50,000 shares

                        of common at $20 exercise price (Issued 7-1-2021)

         Stock options B outstanding for 20,000 shares

                        of common at $45 exercise price (issued 1-1-020)

         Retained earnings                                                                                                  875,000

         Bonds payable, Series A 10%, nonconvertible

                        (issued at par,)                                                                                         500,000

         Bonds payable, Series B 10%, convertible, each $1,000 bond

                        is convertible into 60 shares of common stock

                        (issued at par)                                                                                         400,000

         Net income                                                                                                             318,000

 

Average tax rate: 35%

Average market price of common stock during 2021 - $40

The Series A bonds were issued at par on 4/1/2021, 20 year life.

The Series B bonds were issued at par on 1/1/2019, 10 year life.

 

REQUIRED:

a. Calculate the weighted average number of shares outstanding.

b. Calculate the base (simple) EPS for Megamoth Corporation.

c. Calculate the incremental per share effect (dilution index) for potentially dilutive securities and indicate their order of entry into the calculation of diluted EPS.

d. Compute the diluted earnings per share (EPS).

Answer rating: 100% (QA)

aThe weighted average number of shares outstanding Months Actual share outstanding Stock dividends A... View the full answer