QUESTION 31 In computing earings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, Question: Which amount should then be added as an adjustment to the numerator (net earnings)? 1. Annual preferred dividend times (one minus the income tax rate) 2 Annual preferred dividend times the income tax rate 3.50 4. Annual preferred dividend QUESTION 32 When applying the treasury stock method for diluted earnings per share, Question: The market price of the common stock used for the repurchase is the 1 price at the beginning of the year 2 price at the end of the year 3 weighted average market price, A average market price