As of December 31, year 1, Hunter Company had 100,000 shares of common stock issued and outstanding. In year 2, Hunter issued a 10% stock dividend on July 1. At the end of year 2 there were 30,000 unexercised stock options to purchase shares of common stock at $20 per share. During year 2, the average market price of Hunter’s common stock was $36 per share. Year 2 net income was $860,000. For year 2, what are the diluted earnings per common share?
A. $6.62
B. $6.97
C. $7.81
D. $6.14
Answer:B
As of December 31, year 1, Hunter Company had 100,000 shares of common stock issued and outstanding. In year 2, Hunter issued a 10% stock dividend on July 1. At the end of year 2 there were 30,000 unexercised stock options to purchase shares of common stock at $20 per share. During year 2, the average market price of Hunter’s common stock was $36 per share. Year 2 net income was $860,000. For year 2, what are the diluted earnings per common share?
A. $6.62 B. $6.97 C. $7.81 D. $6.14