How many shares should be added to the denominator

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Question - For the year ended in 2021, Florence Company had the following:

$2,300,000 of Net Income

5,000,000 common shares outstanding on January 1

350,000 shares of 5% cumulative, $10 par value preferred stock issued in 2018 (Dividends were paid annually except for in 2020).

On May 1 it repurchased as treasury stock 300,000 shares of common stock

On June 1 it granted stock options to purchase 100,000 shares of common stock at an exercise price of $24. The average market price for the year is $26.

In the computation of diluted earnings per share, how many shares should be added to the denominator related to the deemed exercise of the stock options?

Reference no: EM132533526

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