During 2018, its first year of operations, McCollum Tool Works entered into the following transactions relating...

During 2018, its first year of operations, McCollum Tool Works entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue 100 million common shares, $1 par per share.

Jan.	2	Issued 45 million common shares for cash.
	3	Entered an agreement with the company president to issue up to 2 million additional shares of common stock in 2019 based on the earnings of McCollum in 2019. If net income exceeds $130 million, the president will receive 1 million shares; 2 million shares if net income exceeds $140 million.
Mar.	31	Issued 4 million shares in exchange for plant facilities.

Net income for 2018 was $135 million.

Required:

Compute basic and diluted earnings per share for the year ended December 31, 2018.

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Basic Earning Per share	Net Income/No of Shares
	$ 135/(45+4)
	$ 2.76	per share

Diluted Earning Per share	Net Income/(No of Shares+potential shares)
	$ 135/(45+4+2)
	$ 2.65	per share

ekkarill92 answered 1 year ago

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