Question

Please help. I cannot figure this out

On December 31, 2017, Berclair Inc. had 520 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $850 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value. Required: Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Answert 1) calculation of Basie Eps:- Net Income = $ 850 preferred dividend' = 100 pershare x 3 million * 9% = 27 Million weighted average shares of common slock out standing. jani, to Dec 31.-) 520 million x[12/12) = 520x105% = 546 Mayi, to Dec 31 - 24 Million x(10%) = 20x105% -21 Oct- to Dec 31 - 4 Million x(3/2):1 weighted average shakes = 546-21+1=526. Basie EPS = (850-27) 520 = $1.56 per share. (Rounded) 2) calculate Dikeled EPS Treasury shayes = 30 Millions * $56 = 1680 Million • 1680 Millions $70 per share. : 24 Million shares. Incremental shares = 30 million – 24 Hilton = 6 million Diluted EPS = (850 million - 27 Million)/526 Million +6 millions) = 823 million/532 Million Diluted EPS =$1.55 per share (Rounded) :. Basie Eps = $1.56 per share ; Diluited EPS = $ 1.55 per shaves