Reference no: EM133044216

Questions -

Q1. Hurontario Enterprises had 200,000 shares of ordinary stock issued and outstanding at December 31, 2020. On July 1, 2021, Hurontario issued a 10 percent stock dividend. Unexercised stock options to purchase 40,000 shares of ordinary stock (adjusted for the 2021 stock dividend) at 20 per share were outstanding at the beginning and end of 2021. The market price of Hurontario's ordinary stock (which was not affected by the stock dividend) was 25 per share during 2021. Net income for the year ended December 31, 2021, was 1,100,000. What should be Hurontario's 2021 diluted earnings per ordinary share, rounded to the nearest penny?

a. 4.23

b. 4.82

c. 5.00

d. 5.05

Q2. On January 2, 2020, Lakeshore Co. issued at par 50,000 of 4 percent bonds convertible, in total, into 5,000 shares of Lakeshore's ordinary stock. No bonds were converted during 2020. Throughout 2020 Lakeshore had 5,000 shares of ordinary stock outstanding. Lakeshore's 2020 net income was 5,000. Lakeshore's income tax rate is 40 percent. No potentially dilutive securities other than the convertible bonds were outstanding during 2020. Lakeshore's diluted earnings per share for 2020 would be

a. 0.58.

b. 0.62.

c. 0.70.

d. 1.16

Q3. At December 31, 2020, the Queen Company had 700,000 shares of ordinary stock outstanding. On September 1, 2021, an additional 300,000 shares of ordinary stock were issued. In addition, Queen had 20,000,000 of 8 percent convertible bonds outstanding at December 31, 2020, which are convertible into 400,000 shares of ordinary stock. No bonds were converted into ordinary stock in 2021. The net income for the year ended December 31, 2021, was 6,000,000. Assuming the income tax rate was 40 percent, what should be the diluted earnings per share for the year ended December 31, 2021?

a. 5.00

b. 5.53

c. 5.80

d. 8.30

Q4. The 2021 net income of Atwater Inc. was 200,000 and 100,000 shares of its ordinary stock were outstanding during the entire year. In addition, there were outstanding options to purchase 10,000 shares of ordinary stock at 10 per share. These options were granted in 2020 and none had been exercised by December 31, 2021. Market prices of Atwater's ordinary stock during 2021 were

January 1 20 per share

December 31 40 per share

Average Price 25 per share

The amount that should be shown as Atwater's diluted earnings per share for 2021 (rounded to the nearest cent) is

a. 2.00.

b. 1.95.

c. 1.89.

d. 1.86.

Q5. Alberta Incorporated has 2,500,000 shares of ordinary stock outstanding on December 31, 2020. An additional 500,000 shares of ordinary stock were issued April 1, 2021, and 250,000 more on July 1, 2021. On October 1, 2021, Alberta issued 5,000, 1,000 face value, 7 percent convertible bonds. Each bond is convertible into 40 shares of ordinary stock. No bonds were converted into ordinary stock in 2021. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively?

a. 2,875,000 and 2,925,000

b. 2,875,000 and 3,075,000

c. 3,000,000 and 3,050,000

d. 3,000,000 and 3,200,000