Question
Baker Instruments reported $6,000,000 in net income for the current year. The company had $500,000 of 10% cumulative, non-convertible preferred stock outstanding all year, and
Baker Instruments reported $6,000,000 in net income for the current year. The company had $500,000 of 10% cumulative, non-convertible preferred stock outstanding all year, and issued, $5,000,000 of 6% convertible bonds issued on June 1. Determine the numerator for both basic and diluted EPS when the tax rate is 40%.
A. basic EPS $6,000,000 - $50,000 (5/12); diluted EPS $6,000,000 - $50,000 (5/12) + ($300,000 times 5/12) (1 - s .40)
B. basic EPS $6,000,000 - $50,000; diluted EPS $6,000,000 - $50,000 + ($300,000 times 7/12)(1 - .40)
C. basic EPS $6,000,000 - $50,000; diluted EPS $6,000,000 - $50,000 + ($300,000 times 5/12)(1 - .40)
D. basic EPS $6,000,000 - $50,000 (7/12); diluted EPS $6,000,000 - $50,000 (7/12) + ($300,000 times 7/12) (1 - .40)
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