Homework Answers
No. of shares to be used in computing basic earnings per share on Dec 31, 2019:
= Weighted average no. of shares during the year 2019
= 2,000,000 + (100,000*9/12) + (240,000*4/12)
=2,000,000 + 75,000 + 80,000
=2,155,000.
No. of shares to be used in computing diluted earnings per share on Dec 31, 2019:
= Weighted average no. of shares during 2019 + Weighted average no. of potential shares during 2019
= 2,155,000 + [(2,000,000/1,000)*40]
=2,155,000 + 80,000
=2,235,000
{Note: Given that each $1,000 bond is convertible into 40 shares. Therefore [(2,000,000/1,000)*40]
Therefore the answer is b : 2,155,000 and 2,235,000
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