Mighty Corporation holds 80 percent of the common stock of Longfellow Company The following balance sheet data are presented for December 31, 20X7 Longfellow Company reported net income of ( $ 115,000 ) in (20 times 7 ) and paid dividends of ( $ 60,000 ) The Longfellow Company bonds have an annual ...

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Mighty Corporation holds 80 percent of the common stock of Longfellow Company. The following balance sheet data

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Mighty Corporation holds 80 percent of the common stock of Longfellow Company. The following balance sheet data are presented for December 31, 20X7:

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Longfellow Company reported net income of $\$ 115,000$ in $20 \times 7$ and paid dividends of $\$ 60,000$. The Longfellow Company bonds have an annual interest rate of 8 percent and are convertible into 30.000 common shares. The preferred shares of Longfellow Company pay an 11 percent annual dividend and convert into 20,000 shares of common stock. In addition, Longfellow Company has warrants outstanding for 10,000 shares of common stock at $\$ 8$ per share. The $20 \mathrm{X} 7$ average price of Longfellow Company common shares was $\$ 40$.
Mighty Corporation reported income from its own operations for $20 \times 7$ of $\$ 300,000$ and paid dividends of $\$ 200,000$. Its 10 percent bonds convert into 25,000 shares of Mighty Corporation common stock. The companies file separate tax returns and are subject to income taxes of 40 percent.
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Compute basic and diluted earnings per share for the consolidated entity for $20 \times 7$.

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