Question

Meyers, Inc. presented the following data:

2024 Net income $2,500
Preferred stock:
10% cumulative, not convertible $3,000
Common stock:
1/1: 1,000 shares outstanding
9/1: 1,000 shares issued in a 2-for-1 stock split
10/1: 200 shares treasury stock acquired
11/1: 240 shares issued for cash
No preferred dividends were declared or paid in 2014, the first year of the company. The denominator to be used in Basic EPS is:_____.
a. 1.910.
b. 1,657.
c. 2,090.
d. 1,990.

Answer 1

d. 1,990.

Step-by-step explanation:

The computation of the denominator that should be used for determining the basic EPS is as follows:

Outstanding shares Oustanding months Equivalent units

2,000 (9 ÷ 12) 1,500

(1,000 × 2)

1,800 (1 ÷ 12) 150

(2,000 - 200)

$2,040 (2 ÷ 12) 340

(1,800 + 240)

Total shares 1,990