The following information is available for Packard Corporation

The following information is available for Packard Corporation:

January 1, 2013 Shares outstanding 1,000,000
April 1, 2013 Treasury shares purchased 250,000
October 1, 2013 Shares issued in a 100% stock dividend 750,000

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The weighted-average number of shares to be used in computing earnings per common share for 2013 is (Points : 7)
1,625,000
750,000
1,500,000
2,000,000
Q2 Corresponds to CLO 1(c) On January 2, 2013, Interval Co. issued at par $1,000,000 of 7% convertible bonds. Each $1,000 bond is convertible into 20 shares of common stock. No bonds were converted during 2013. Interval had 200,000 shares of common stock outstanding during 2013. Interval’s 2013 net income was $300,000 and the income tax rate was 30%. Interval’s diluted earnings per share for 2013 would be (rounded to the nearest penny): (Points : 7)
$1.74
$1.59
$1.50
$1.68

Q3

Corresponds to CLO 1(d) On January 1, 2013, Lakewood Corporation granted stock options to officers and key employees for the purchase of 50,000 shares of the company’s $10 par common stock at $25 per share as additional compensation for services to be rendered over the next three years. The market price of common stock was $31 per share at the date of grant. The options are exercisable during a five-year period beginning January 1, 2016 by grantees still employed by Lakewood. The Black-Scholes option pricing model determines total compensation expense to be $450,000. The 2013 income statement will include compensation expense related to these stock options in the amount of: (Points : 7)
$90,000
$150,000
$300,000
$450,000

Q4

Corresponds to CLO 2(a) On July 1, 2103, Atlas Corporation acquired 500, $1,000, 7% bonds at 97 plus accrued interest. The bonds were dated April 1, 2013, and mature on March 31, 2018, with interest paid each September 30 and March 31. The bonds will be added to Atlas’s available-for-sale portfolio. The journal entry to record the purchase of this investment will include (Points : 7)
a debit to Bond discount for $15,000.
a credit to Investments for $500,000.
a debit to Cash for $500,000.
a credit to Cash for $485,000.