81.Dilutive convertible securities must be used in the computation of

a.basic earnings per share only.

b.diluted earnings per share only.

c.diluted and basic earnings per share.

d.none of these.

82.In computing earnings 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, which amount should then be added as an adjustment to the numerator (net earnings)? a. Annual preferred dividend

b.Annual preferred dividend times (one minus the income tax rate)

c.Annual preferred dividend times the income tax rate

d.Annual preferred dividend divided by the income tax rate

83.In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition of common stock at the average market price during the period. If the exercise price of the options or warrants exceeds the average market price, the computation would

a.fairly present diluted earnings per share on a prospective basis.

b.fairly present the maximum potential dilution of diluted earnings per share on a prospective basis.

c.reflect the excess of the number of shares assumed issued over the number of shares assumed reacquired as the potential dilution of earnings per share. d. be antidilutive.

84.In applying the treasury stock method to determine the dilutive effect of stock options and warrants, the proceeds assumed to be received upon exercise of the options and warrants a. are used to calculate the number of common shares repurchased at the average market price, when computing diluted earnings per share.

b.are added, net of tax, to the numerator of the calculation for diluted earnings per share.

c.are disregarded in the computation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common stock. d. none of these.

85.When applying the treasury stock method for diluted earnings per share, the market price of the common stock used for the repurchase is the a. price at the end of the year.

b.average market price.

c.price at the beginning of the year.

d.none of these.

86.Antidilutive securities

a.should be included in the computation of diluted earnings per share but not basic earnings per share.

b.are those whose inclusion in earnings per share computations would cause basic earnings per share to exceed diluted earnings per share.

c.include stock options and warrants whose exercise price is less than the average market price of common stock.

d.should be ignored in all earnings per share calculations.

*87. Assume there are two dilutive convertible securities.  The one that should be used first to recalculate earnings per share is the security with the a. greater earnings adjustment.

b.greater earnings per share adjustment.

c.smaller earnings adjustment.

d.smaller earnings per share adjustment.

88.Jett Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $1,050,000 for the year ending December 31, 2007. Earnings per share of common stock for 2007 would be

a.$1.75.

b.$.83.

c.$1.00.

d.$1.17.

89.At December 31, 2007, Norbett Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2007. Net income for the year ended December 31, 2007, was $1,020,000. What should be Norbett's 2007 earnings per common share, rounded to the nearest penny?

a.$2.02

b.$2.55

c.$2.40

d.$2.27

90.Loeb Co. had 600,000 shares of common stock outstanding on January 1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock on September 1, and issued 54,000 shares on November 1. The weighted average shares outstanding for the year is a. 651,000.

b.672,000.

c.693,000.

d.714,000.

 

 

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