Reference no: EM132973149

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: For this question only, assume that YES had granted 45,000 stock options (put options) to some of its executives, and each option gave the holder the right to sell to YES, one share at the option price of $37 per share. None of these options have yet been exercised throughout 2019. The average market price of the common shares of YES during 2019 was $20. Using the reverse treasury stock method (i.e., cash out/cash in), what is the impact on the number of shares that should be used in calculating diluted earnings per share for 2019?

a. 20,676 shares.
b. 16,650 shares.
c. 38,250 shares.
d. The number of shares cannot be determined with the information given.
e. None of the above