Reference no: EM131784645

Question 1 - Gregory's on Ormond, Inc. grants its president 2,000 stock options on January 1, Year 1, that give him rights to purchase shares of the company for $40 per share on December 31, Year 2. At the time the options were granted, the fair value of the options totaled $20,000. At December 31, Year 1, the company's stock sold for $45 per share and at December 31,Year 2, the selling price of the stock was $55 per share. On December 31, Year 2, the president resigned from the company and did not elect to exercise the options. In its Year 2 financial statements, Gregory's on Ormond would recognize compensation expense relative to the options of:

A. ($10,000)

B. $0

C. $10,000

D. $15,000

Question 2 - Simpson Corporation computed its diluted earnings per share for the year ended September 30. The company had 200,000 shares outstanding at the beginning of the year, issued 60,000 shares at April 1, and reacquired 2,000 shares to be held in its treasury on July 1. The company also had 2,000 options outstanding exercisable at $40 per share. The average market price of Simpson's shares during the year was $50. The common stock equivalents added to the company's weighted average shares outstanding used for basic earnings per share was computed using the treasury stock method. How many additional shares would Simpson include in its diluted earnings per share calculation?

A. 0

B. 400

C. 1,200

D. 1,600

Question 3 - Jones Fortune Company issued 10,000 shares of $15 par common stock on February 1 for $20 per share. The company bought back 2,000 shares when the share price fell to $16 per share on August 31 and then resold 1,000 shares when the price rebounded to $22/share on December 15. Jones accounts for its treasury stock transaction using the cost method. What amount would Jones report as Common Stock in the equity section of its December 31 balance sheet?

A. $135,000

B. $140,000

C. $150,000

D. $190,000