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Howard's company earned $320,000 in a year when it had an average of 40,000 ordinary...

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Accounting

Howard's company earned $320,000 in a year when it had an average of 40,000 ordinary shares outstanding. The ordinary shares sold at an average market price of $7.5 per share in the year. Also outstanding were 30,000 warrants that could be exercised to buy one ordinary share for $5 for each warrant exercised.

(a) Determine whether the warrant exercised lead to dilutive earnings per share.

(b) Compute the number of treasury shares that can be bought back through proceeds of warrants if exercised. How many related incremental shares that can be issued?

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