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In applying the treasury stock method to determine

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84. In applying the treasury stock method to determine the dilutive effectof stock options andwarrants, the proceeds assumed to be received upon exercise of theoptions and warrantsa. are used to calculate the number of common shares repurchased at theaveragemarket price, when computing diluted earnings per share.b. are added, net of tax, to the numerator of the calculation for dilutedearnings pershare.c. are disregarded in the computation of earnings per share if the exerciseprice of theoptions and warrants is less than the ending market price of commonstock.d. none of these.
85. When applying the treasury stock method for diluted earnings pershare, the market priceof the common stock used for the repurchase is the
86. Antidilutive securities
*87. Assume there are two dilutive convertible securities. The one thatshould be used first torecalculate earnings per share is the security with the
Multiple Choice Answers—Earnings Per Share—ConceptualItem Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.74. c 76. d 78. b 80. d 82. a 84. a 86. d75. d 77. c 79. b 81. b 83. d 85. b *87. dSolution to Multiple Choice question for which the answer is “none ofthese.”75. annual preferred dividend.88. Jett Corp. had 600,000 shares of common stock outstanding onJanuary 1, issued900,000 shares on July 1, and had income applicable to common stock of$1,050,000 forthe year ending December 31, 2007. Earnings per share of common stockfor 2007 wouldbea. $1.75.b. $.83.c. $1.00.d. $1.17.89. At December 31, 2007, Norbett Company had 500,000 shares of
common stock issuedand outstanding, 400,000 of which had been issued and outstandingthroughout the yearand 100,000 of which were issued on October 1, 2007. Net income for theyear endedDecember 31, 2007, was $1,020,000. What should be Norbett's 2007earnings percommon share, rounded to the nearest penny?

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