An excerpt from the statement of financial position of Carla Vista Limited follows: CARLA VISTA LIMITED Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Notes payable, 10% $4,765,000 2,187,000 4% convertible bonds payable 6% convertible bonds payable 2,736,000 Total long-term debt $ 9,688,000 Shareholders' equity $0.72 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 648,800 shares issued and outstanding) Common shares, no par value (8,447,600 shares authorized, 2,758,500 shares issued and outstanding) $3,244,000 24,236,000 Contributed surplus 193,300 Retained earnings 7,001,900 Total shareholders' equity $ 34,675,200 Notes and Assumptions December 31, 2020 1. Options were granted/written in 2019 that give the holder the right to purchase 96,600 common shares at $ 8 per share. The average market price of the company's common shares during 2020 was $ 14 per share. The options expire in 2028 and no options were exercised in 2020. 2. 3. The 4% bonds were issued in 2019 at face value. The 6% bonds were issued on June 1, 2020, at face value. Each bond has a face value of $1,000 and is convertible into 100 common shares. The convertible preferred shares were issued at the beginning of 2020. Each share of preferred is convertible into one common share. The average income tax rate is 25%. 4. 5. 6. The common shares were outstanding during the entire year. Preferred dividends were not declared in 2020. Net income was $ 2,532,200 in 2020. 7. 8. No bonds or preferred shares were converted during 2020. Calculate the income effect of the dividends on preferred shares. $ Dividends on preferred shares e Textbook and Media Calculate basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.) Basic EPS $ $ Calculate basic earnings per share for 2020. (Round answer to 2 decimal places, eg. 15.25.) Basic EPS $ eTextbook and Media Determine an incremental per share effect for $ 0.72 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS $ 0.72 Preferred shares $ $ eTextbook and Media Calculate the proceeds from assumed exercise of 96,600 options. Proceeds from exercise of options $ Calculate the incremental shares oustanding upon the exercise of options. The incremental shares oustanding upon the exercise of options Calculate the after-tax interest paid on the 4% bonds. $ After-tax interest on 4% bonds converted eTextbook and Media Determine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Potentially dilutive security Incremental Denominator Effect EPS 4% Bonds $ $ eTextbook and Media Calculate the after-tax interest paid on the 6% bonds. $ After-tax interest on 6% bonds converted Determine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 6% Bonds GA $ eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 4% Bonds 6% Bonds
