Marigold Corp. had 1540000 shares of common stock issued and outstanding at December 31, 2020. On...

Marigold Corp. had 1540000 shares of common stock issued and outstanding at December 31, 2020. On July 1, 2021 an additional 1255000 shares were issued for cash. Marigold also had stock options outstanding at the beginning and end of 2021 which allow the holders to purchase 370000 shares of common stock at $20 per share. The average market price of Marigold's common stock was $25 during 2021. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021?

Expert Solution

Weigted average shares outstanding = Beginning shares outstanding + Number of issued shares * 6/12

= 1540000 + 1255000 * 6/12

= 2167500

Number of shares considered for diluted eps = Weighted average shares + Dilutive options

= 2167500 + 370000

= 2537500

ekkarill92 answered 2 years ago

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