Baldwin Company Had 40,000 Shares of Common Stock Outstanding on January

Multiple Choice

Baldwin Company had 40,000 shares of common stock outstanding on January 1, 2009. On April 1, 2009 the company issued 20,000 shares of common stock. The company had outstanding fully vested incentive stock options for 10,000 shares exercisable at $10 that had not been exercised by its executives. The end-of-year market price of common stock was $11 while the average price for the year was $12. What number of shares of stock should be used in computing diluted earnings per share?

A) 65,000.
B) 56,667.
C) 55,000.
D) 61,667.40,000 + (20,000 9/12) + (10,000 - 8,333*) = 56,667 *(10,000 $10) /$12 = 8,333