Question
Carla VistaCorporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020 was $395,000and there were58,000common shares
Carla VistaCorporation is preparing earnings per share data for 2020. The net income for the year ended December 31, 2020 was $395,000and there were58,000common shares outstanding during the entire year.Carla Vistahas the following two convertible securities outstanding:
10% convertible bonds (each $1,000bond is convertible into20common shares)$111,0004% convertible $100par value preferred shares (each share is convertible into2common shares)$48,000
Both convertible securities were issued at face value in 2017. There were no conversions during 2020, andCarla Vista's income tax rate is22%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately.
CalculateCarla Vista's dilutive earnings per share for 2020.
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