17. Below we present Horan Incorporated's current-year partial income statement. Horan is subject to a 40% income tax rate. (Click the icon to view the partial income statement for the current year.) A partial balance sheet for the current year follows. 2(Click the icon to view the partial balance sheet for the current year.) Read the requirements Requirement a. Based on the information provided, compute basic and diluted earnings per share (EPS) for the current year. Include all computations related to the application of antidilution sequencing, if needed. Begin by calculating the incremental income per share on each of the potentially dilutive securities and ranking their order of entry into the EPS computation. (Complete all answer boxes. Enter a "0" for any zero balances. Round the increase in income amounts to the nearest dollar. Round the incremental income per share amounts to the nearest cent, $X.XX.) Increase in the incremental Rank Order of Potentially Dilutive Increase Number of Income per Entry into the EPS Security in Income Common Shares Share Computation 5% convertible debt Convertible preferred stock Employee options (2) (3) Complete the table below to calculate the basic and diluted EPS on income from continuing operations and to identify whether each security is dilutive or antidilutive. (Complete all answer boxes. Enter a "0" for any zero balances. Round all per share amounts to the nearest cent, $X.XX. Abbreviation used: ops. = operations.) Income Available to Common Common Per Description Shareholders Shares Share Basic EPS Income from continuing ops, available to common 1st: (6) 2nd: (8) (9) 3rd: (10) (11) Calculate the basic earnings per share for net income. (Round the EPS to the nearest cent, $X.XX.) Basic EPS from net income for the current year is $ Calculate the diluted earnings per share for net income. (Round the EPS to the nearest cent, $X.XX.) Diluted EPS from net income for the current year is $ Requirement b. Prepare the income statement disclosures required beginning with income from continuing operations. (Complete all answer boxes. Round all EPS amounts to the nearest cent, $X.XX.) Horan Incorporated EPS Disclosure Income Statement (Partial) For the Current Year Income from continuing operations (12) (13) Basic Earnings per Common Share Income from continuing operations (14) (15) Diluted Earnings per Common Share Income from continuing operations (16) (17) shares shares 1: Partial Income Statement Partial Income Statement Income from continuing operations Current Year 1,251,090 537,960 Discontinued operations-income, net of tax 1,789,050 Net income 2: Partial Balance Sheet Current Year $8,115,000 Partial Balance Sheet Liabilities: 5% Convertible Debt - issued at $1,000 par(1) Stockholders' Equity: Common Stock, no par (1,026,000 shares issued and outstanding)) $3 Convertible Preferred Stock, $100 par value (42,000 shares issued and outstanding)(3) Deferred compensation (employee options to acquire 171,612 shares) $5,190,000 4,200,000 (1,912,500) Footnotes to the Balance Sheet: (1) Each bond is convertible into 82 shares of common stock. The bonds are outstanding all year. (2) The number of shares issued and outstanding did not change throughout the year. (3) Each preferred share is convertible into 9 shares of common stock. The firm declared preferred dividends. The preferred stock was outstanding all year. (4) The options are exercisable at $25 per share and the average market price of the company's stock for the year is $42. The options were outstanding all year. 3: Requirements a. Based on the information provided, compute basic and diluted earnings per share for the current year. Include all computations related to the application of antidilution sequencing, if needed. b. Prepare the income statement disclosures required beginning with income from continuing operations
