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What is basic and diluted EPS

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Reference no: EM132955583

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(1) Fox Co. bought $400,000, 9%, 7-year bonds for $420,000 from Owl Co. If Fox intends to sells these bonds 6 months after purchase, what is the entry that Fox should prepare on purchasing these bonds from Owl?

A. Dr Trading Securities 420,000 & Cr. Cash 420,000

B. Dr Available for Sale Securities 420,000 & Cr. Cash 420,000

C. Dr Trading Securities 400,000 & Premium on Trading Securities 20,000 & Cr. Cash 420,000

D. Dr Bonds Payable 400,000 & Premium on Bonds Payable 20,000 & Cr. Cash 420,000

(2) Owl Co. has 200,000 common shares, 50,000 common stock options, and 20,000 shares of $100, 5% cumulative preferred stock, all of which were outstanding during 2020. The stock options exercise price is $20 and the average market price is $50 during 2020. Owl has net income of $500,000 and declared no dividends in 2020. What is basic and diluted EPS?

A. Basic EPS $2.00 & Diluted EPS $1.60

B. Basic EPS $2.50 & Diluted EPS $1.60

C. Basic EPS $2.50 & Diluted EPS $1.74

D. Basic EPS $2.00 & Diluted EPS $1.74

Reference no: EM132955583

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