Werth, Incorporated, has 3,200,000 shares of common stock outstanding on December 31, 2007. An additional 800,000 shares of common stock were issued on April 1, 2008, and 400,000 more on July 1, 2008. On October 1, 2008, Werth issued 20,000, $1,000 face value, 8% convertible bonds. Each bond is convertible into 20 shares of common stock. No bonds were converted into common stock in 2008. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively?
A) 4,000,000 and 4,000,000
B) 4,000,000 and 4,100,000
C) 4,000,000 and 4,400,000
D) 4,400,000 and 5,200,000

Question

Quizplus · Accepted Answer

3,200,000 + (800,000 × 9/12) + (400,000 × 6/12) = 4,000,000 (BEPS)
4,000,000 + (20,000 × 20 × 3/12) = 4,100,000 (DEPS).

Werth, Incorporated, Has 3,200,000 Shares of Common Stock Outstanding on December