Basic and Diluted Earnings Per Share. Lizzow Company is preparing its EPS calculations for the year ended December 31, 2021 and has assembled the following relevant information:The company’s average stock price during the year was $25, and its income tax rate was 25%Common Stock: 2,000,000 shares, $1 par, outstanding at the beginning of the year4% Convertible and Cumulative Preferred Stock: 50,000 shares, $100 par value, outstanding at the beginning of the year.75,000 common shares were issued on May 1, 20214% convertible bonds are outstanding that were issued at their $3,000,000 face value. Each $1,000 bond is convertible into 20 shares of common stock.The company has 50,000 incentive stock options outstanding at the end of the year. The options are fully vested and have an exercise price of $10 per share.Net Income for the year was $5 million. Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021

EPS is Earnings per share is the measuring rod of the profitability of the company. The basic EPS is…

Answered: Calculate the amount of 1) Basic and…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

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Basic and Diluted Earnings Per Share. Lizzow Company is preparing its EPS calculations for the year ended December 31, 2021 and has assembled the following relevant information:

The company’s average stock price during the year was $25, and its income tax rate was 25%
Common Stock: 2,000,000 shares, $1 par, outstanding at the beginning of the year
4% Convertible and Cumulative Preferred Stock: 50,000 shares, $100 par value, outstanding at the beginning of the year.
75,000 common shares were issued on May 1, 2021
4% convertible bonds are outstanding that were issued at their $3,000,000 face value. Each $1,000 bond is convertible into 20 shares of common stock.
The company has 50,000 incentive stock options outstanding at the end of the year. The options are fully vested and have an exercise price of $10 per share.
Net Income for the year was $5 million.

Calculate the amount of 1) Basic and 2)Diluted Earnings per Share for the Year ended December 31, 2021

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