Lemke Co. has 4,000,000 shares of common stock outstanding on December 31, 2007. An additional 200,000 shares are issued on April 1, 2008, and 480,000 more on September 1. On October 1, Lemke issued $6,000,000 of 9% convertible bonds. Each $1,000 bond is convertible into 40 shares of common stock. No bonds have been converted. The number of shares to be used in computing basic earnings per share and diluted earnings per share on December 31, 2008 is
A) 4,310,000 and 4,310,000.
B) 4,310,000 and 4,370,000.
C) 4,310,000 and 4,550,000.
D) 5,080,000 and 5,320,000.

Question

Quizplus · Accepted Answer

4,000,000 + (200,000 × 9/12) + (480,000 × 4/12) = 4,310,000.
4,310,000 + [($6,000,000 ÷ $1,000) × 40 × 3/12] = 4,370,000.

Lemke Co Has 4,000,000 Shares of Common Stock Outstanding on December