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8) Red Company had 2,000,000 shares of common stock issued and outstanding at December 31,...

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Accounting

8) Red Company had 2,000,000 shares of common stock issued and outstanding at December 31, 2020. On July 1, 2021 an additional 1,500,000 shares were issued for cash. Red also had stock options outstanding at the beginning and end of 2021 which allow the holders to purchase 375,000 shares of common stock at $20 per share. The average market price of Red's common stock was $25 during 2021. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021?

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