On December 31, 2012, Brisbane Company had 100,000 shares of common stock outsta

Question

On December 31, 2012, Brisbane Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2013, Brisbane purchased 24,000 shares of common stock on the open market as treasury stock paying $40 per share. Brisbane sold 6,000 treasury shares on Spetmeber 30, 2013, for $45 per share. Net income for 2013 was $180,905. Also outstanding during the year were fully vested incentive stock opetions giving key personnel the option to buy 50,000 common shares at $40. The market price of the common shares averaged $50 during 2013.

Compute Brisbane's basic and diluted earnings per share (rounded to 2 decimal places) for 2013. Show work.

THANK YOU

Explanation / Answer

BASIC:

(180905-105000)/(100,000-24000(10/12)+6000(2/12))= 75905/81500 = 0.93

DILUTED:

(180905-105000)/(100,000-24000(10/12)+6000(2/12+50000-40000))= 75905/91500 = 0.83

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