Kasravi Co. had net income for 2021 of $600,000. The weighted average number of shares outstanding...

Kasravi Co. had net income for 2021 of $600,000. The weighted average number of shares outstanding for the period was 200,000 shares. Kasravi also had 12,000 stock options issued and outstanding for the entire year of 2021. Each option can be exercised for 1 share of common stock at a price of $30 per share. The average market price of the common stock during the year was $36. What should Kasravi Co. report for diluted earnings per share for the year ended 2021? (hint: use treasury stock method for options dilutive effect on EPS)

Expert Solution

Diluted EPS

$ 2.97

Working:

Net Income [A]	600,000.00

Weighted Common Stock Outstanding [B]	200,000.00
Add: Stock Options [Working]	2,000.00
Weighted Common Stock Outstanding [Adjusted] [C]	202,000.00

Working:
Proceeds from Stock options [a] [12000*30]	$ 360,000.00
Average Market Price [b]	36.00
Shares assumed purchased [c=a/b]	10,000.00
Shares assumed Issued [d][Given]	12,000.00
Incremental Share Increase [e=d-c]	2,000.00
Weighted Outstanding [f] [12/12]	1.00
Weighted Incremental Increased Share [e*f]	2,000.00


DEPS [A/C]	$ 2.97

ekkarill92 answered 1 year ago

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