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Coren, Inc. had 500,000 common shares issued and outstanding at December 31, 2001. On July 1,
2 002, an additional 50,000 common shares were issued for cash. Coren also had unexercised stock options to purchase 40,000 common shares at $15 per share outstanding at the beginning and end of
2 002. The average market price of Coren's common shares was $20 during 2002. What is the number of shares that should be used in calculating diluted earnings per share for the year ended December 31,
2 002?
A. 565,000
B. 525,000 ,
C. 535,000
Answer: C
500,000+(50,000 x6/12)+[40,000 - (40,000 x$15/20)]=$535,000

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