Question
BlossomCorporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020 was $409,000 and there were 58,500
BlossomCorporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020 was $409,000 and there were 58,500 common shares outstanding during the entire year. Blossom has the following two convertible securities outstanding:
10% convertible bonds (each $1,000 bond is convertible into 25 common shares) | $110,000 | |
3% convertible $100 par value preferred shares (each share is convertible into 2 common shares) | $51,000 |
Both convertible securities were issued at face value in 2017. There were no conversions during 2020, and Blossoms income tax rate is 23%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately.
Determine an incremental per share effect for the 14% preferred shares.
Calculate Blossom's dilutive earnings per share for 2020.
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