Diluted Earnings per Share – Stock Options The records of Eureka Gold Company reveal the following capital structure as of December 31, 2018. $9 preferred stock, $100 par, 5,000 shares issued and outstanding………………………… $500,000 Additional paid-in capital on preferred stock…………………………………………………………… 110,000 Common stock, $10 par, 175,000 shares issued and outstanding……………………………. 1,750,000 Additional paid-in capital on common stock……………………………………………………………. 550,000 Retained earnings……………………………………………………………………………………………………. 778,000 To stimulate work incentive and to bolster trade relations, Eureka Gold on May 1, 2019, issued stock options to selected executives, creditors, and others allowing the purchase of 32,000 shares of common stock for $26 a share. Market prices for the stock at various times during 2019 were: Option issuance date……………………………………………………………………………………………… $24 Average for the year………………………………………………………………………………………………. 62 A dividend on preferred stock was paid during the year, and there are no dividends in arrears at year-end. There are no other capital transactions during the year. Net income for 2019 was $589,000. Instructions: Compute basic and diluted EPS for 2019.
Diluted Earnings per Share – Stock Options
The records of Eureka Gold Company reveal the following capital structure as of December 31, 2018.
$9
Additional paid-in capital on preferred stock…………………………………………………………… 110,000
Common stock, $10 par, 175,000 shares issued and outstanding……………………………. 1,750,000
Additional paid-in capital on common stock……………………………………………………………. 550,000
To stimulate work incentive and to bolster trade relations, Eureka Gold on May 1, 2019, issued stock options to selected executives, creditors, and others allowing the purchase of 32,000 shares of common stock for $26 a share. Market prices for the stock at various times during 2019 were:
Option issuance date……………………………………………………………………………………………… $24
Average for the year………………………………………………………………………………………………. 62
A dividend on preferred stock was paid during the year, and there are no dividends in arrears at year-end. There are no other capital transactions during the year. Net income for 2019 was $589,000.
Instructions:
Compute basic and diluted EPS for 2019.
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