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Determine the basic earnings per share for the year ended

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Question: On December 31, 2020, Clarkson Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Clarkson purchased 24,000 shares of common stock on the open market as treasury stock paying $45 per share. Clarkson sold 6,000 of the treasury shares on September 30, 2021, for $47 per share. Net income for 2021 was $180,905. Also outstanding at December 31, 2020, were fully vested incentive stock options giving key executives the option to buy 50,000 common shares at $40. These stock options were exercised on November 1, 2021. The market price of the common shares averaged $50 during 2021.

a) Determine the basic earnings per share for the year ended December 31, 2021. Show a labeled calculation for the denominator before calculating EPS.

b) Determine the diluted earnings per share for the year ended December 31, 2021. Show a labeled calculation for the denominator before calculating EPS.

Reference no: EM132765487

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