Q21. The standard equation for computing basic earnings per share (EPS) is:

A)     [Net Income − Common Dividends] / Weighted Average Number of Common Shares Outstanding.

B)     [Net Income – Preferred Dividends] / Weighted Average Number of Common Shares Outstanding.

C)     [Sales − Cost of Goods Sold] / Number of Preferred Shares Outstanding.

Q22. Connecticut, Inc.’s stock transactions during the year 2005 were as follows:

§           January 1: 360,000 common shares outstanding.

§           April 1: 1 for 3 reverse stock split.

§           July 1: 60,000 common shares issued.

When computing for earnings per share (EPS) computation purposes, what is Connecticut’s weighted average number of shares outstanding during 2005?

A)   150,000.

B)   210,000.

C)   270,000.

Q23. The following data pertains to the McGuire Company:

§           Net income equals $15,000.

§           5,000 shares of common stock issued on January 1^st.

§           10% stock dividend issued on June 1^st.

§           1000 shares of common stock were repurchased on July 1^st.

§           1000 shares of 10%, par $100 preferred stock each convertible into 8 shares of common were outstanding the whole year.

What is the company’s basic earnings per share (EPS)?

A)     $2.50.

B)     $1.20.

C)     $1.00.

Q24. For a firm with a simple capital structure, all of the following are necessary to measure basic earnings per share

(EPS) EXCEPT:

A)     the timing and number of shares issued or repurchased during the year.

B)     dividends paid to preferred shareholders.

C)     dividends paid to common shareholders.

thx

d