In 2007 Chirac Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of

Question:

In 2007 Chirac Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Chirac had revenues of $17,500 and expenses other than interest and taxes of $8,400 for 2008. (Assume that the tax rate is 40%.) Throughout 2008, 2,000 shares of common stock were outstanding; none of the bonds was converted or redeemed.

Instructions

(a) Compute diluted earnings per share for 2008.

(b) Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1,

2008 (rather than in 2007), and none have been converted or redeemed.

(c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2008.

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...