At December 31, 2011, Hemington Company had 320,000 shares of common stock outstanding. Hemington sold 80,000 shares

Question:

At December 31, 2011, Hemington Company had 320,000 shares of common stock outstanding. Hemington sold 80,000 shares on October 1, 2012. Net income for 2012 was $1,985,000; the income tax rate was 35%. In addition, Hemington had the following debt and equity securities on its books at December 31, 2011.

(a) 30,000 shares of $100 par, 8% cumulative preferred stock.

(b) 25,000 shares of 10% convertible cumulative preferred stock, par $100, sold at 110. Each share of preferred stock is convertible into three shares of common stock.

(d) $2,500,000 face value of 7% convertible bonds sold to yield 8%. Unamortized bond discount is $150,000 at December 31, 2011. Each $1,000 bond is convertible into 22 shares of common stock.

Also, options to purchase 20,000 shares of common stock were issued May 1,

2012. Exercise price is $20 per share; market value at date of option was $19; ending market value on December 31, 2012, $25.

Instructions:

For the year ended December 31, 2012, compute basic and diluted EPS.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...