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Computing EPS: Convertible Debt Shaffer Corporation issued $100,000 10% convertible bonds in 2019 at face value. Each $1,000 bond is convertible into 100 shares of
Computing EPS: Convertible Debt
Shaffer Corporation issued $100,000 10% convertible bonds in 2019 at face value. Each $1,000 bond is convertible into 100 shares of common stock. Shaffers net income for 2020 is $1,824,000; the tax rate is 25%. No bonds were converted during the year and average common shares outstanding are 1,010,000.
a. Compute basic earnings per share for 2020.
b. Compute diluted earnings per share for 2020.
c. How do the answers to parts a. and b. change if the bonds were issued on July 1, 2020?
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