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MULTIPLE CHOICEEarnings Per ShareCPA Adapted

113. Peine Co. had 300,000 shares of common stock issued and outstanding at December 31, 2006. No common stock was issued during 2007. On January 1, 2007, Peine issued 200,000 shares of nonconvertible preferred stock. During 2007, Peine declared and paid $100,000 cash dividends on the common stock and $80,000 on the preferred stock. Net income for the year ended December 31, 2007 was $620,000. What should be Peine's 2007 earnings per common share? a. $2.07 b. $1.80 c. $1.73 d. $1.47 At December 31, 2007 and 2006, Glass Corp. had 180,000 shares of common stock and 10,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2007 or 2006. Net income for 2007 was $400,000. For 2007, earnings per common share amounted to a. $2.22. b. $1.94. c. $1.67. d. $1.11. Royce Co. had 2,400,000 shares of common stock outstanding on January 1 and December 31, 2007. In connection with the acquisition of a subsidiary company in June 2006, Royce is required to issue 100,000 additional shares of its common stock on July 1, 2008, to the former owners of the subsidiary. Royce paid $200,000 in preferred stock dividends in 2007, and reported net income of $3,400,000 for the year. Royce's diluted earnings per share for 2007 should be a. $1.42. b. $1.36. c. $1.33. d. $1.28. Eller, Inc., had 560,000 shares of common stock issued and outstanding at December 31, 2006. On July 1, 2007, an additional 40,000 shares of common stock were issued for cash. Eller also had unexercised stock options to purchase 32,000 shares of common stock at $15 per share outstanding at the beginning and end of 2007. The average market price of Eller's common stock was $20 during 2007. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2007? a. 580,000 b. 588,000 c. 608,000 d. 612,000 When computing diluted earnings per share, convertible securities are a. ignored. b. recognized only if they are dilutive. c. recognized only if they are antidilutive. d. recognized whether they are dilutive or antidilutive. In determining diluted earnings per share, dividends on nonconvertible cumulative preferred stock should be a. disregarded.

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b. added back to net income whether declared or not. c. deducted from net income only if declared. d. deducted from net income whether declared or not. 119. The if-converted method of computing earnings per share data assumes conversion of convertible securities as of the a. beginning of the earliest period reported (or at time of issuance, if later). b. beginning of the earliest period reported (regardless of time of issuance). c. middle of the earliest period reported (regardless of time of issuance). d. ending of the earliest period reported (regardless of time of issuance).