On January 1, 2008, Crocker Company issued 10 year, $2,000,000 face value, 6 bonds, at par Each $1,000 bond is convertible into 15 shares of Crocker common stock Crockers net income in 2008 was $300,000, and its tax rate was 40 The company had 100,000 shares of common stock outstanding throughout 2...

a Net income 300000 Add Interest savings net of ta ...

On January 1, 2008, Crocker Company issued 10-year, $2,000,000 face value, 6% bonds, at par. Each $1,000

Question:

On January 1, 2008, Crocker Company issued 10-year, $2,000,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Crocker . Crocker’s net income in 2008 was $300,000, and its tax rate was 40%. The company had 100,000 shares of outstanding throughout 2008. None of the bonds were converted in 2008. Instructions
(a) Compute diluted earnings per share for 2008.
(b) Compute diluted earnings per share for 2008, assuming the same facts as above, except that $1,000,000 of
6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Crocker .

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...