Reference no: EM132973157

YES, Inc., reported five securities outstanding on January 1, 2019. There were no equity related transactions during the year and thus these remained unchanged throughout the year.

You are provided the following particulars about the basic EPS plus the incremental effect per share required for the calculation of diluted EPS for each of the five securities are listed below:

                                                              Adjusted Income ($)             Shares
Basic EPS                                            $1,519,000                   350,000
Security Change In Income Change In Shares
Call Options                                                 $0                         21,000
Convertible Bonds                                    $147,000                     36,750
Convertible Preferred Shares                       $56,000                       42,000
Put Options                                                   $0                          (2,800)
Warrants                                                       $0                           70,000

Problem 1: YES began the year, 2019 with 200,000 shares of common stock and 30,000 shares of 7%, $100 par value, cumulative, nonconvertible preferred stock. On March 1 it declared a 5% stock dividend on common shares. On September 30, it purchased 20,000 common shares and cancelled them. On October 1, YES declared a 2-for-one stock split. Operating income for the year was $762,600 and no dividends for 2019 were declared. However, it did pay on January 12, 2019, the preferred dividends which had been declared on November 20, 2018. Compute the weighted average number of common shares and the basic EPS for the year.

a. 2,660,000 shares and $14.07.
b. 380,000 shares and $1.45.
c. 2,870,000 shares and $9.45.
d. 410,000 shares and $1.35.
e. None of the above