Current Attempt in Progress An excerpt from the statement of nancial position of Cullumber Limited fol lows: CU LLUMBER LIMITED Selected Statement of Financial Position Information At Decem her 3 1. 2020 Long-term debt Notes payable, 10% 4% convertible bonds payable 6% convertible bonds payable Total long-term debt Shareholders' equity $0.72 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 547,500 shares issued and outstanding] Common shares, no par value (8,109,700 shares authorized, 3,01 1,500 shares issued and outstanding) Contributed surplus Retained earnings Total shareholders' equity $5,187,000 1,309,000 3,156,000 $10,152,000 $2,737,500 24,508,000 210,200 6,903,600 $34,359,300 Notes and Assumptions December 31, 2020 1. Options were granted/written in 2019 that give the holder the right to purchase 107,800 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. 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. 3. 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%. The common shares were outstanding during the entire year. Preferred dividends were not declared in 2020. Net income was $2,629,900 in 2020. No bonds or preferred shares were converted during 2020. PHQ'E-"P Calculate the income effect ofthe dividends on preferred shares. Dividends on preferred shares Calculate basic earnings per share for 2020. {Round answer to 2 decimal places. as. 15.25.) Basic EPS $ l eTextbook and Media Determine an incremental per share effect for $0.72 preferred shares. (Round answer to 2 decimal places, 8.3. 15.25.] Potentially dilutive Incremental Incremental security Numerator Effect Denominator Effect EPS $0.72 Preferred shares 5 l l ' $ l eTextbook and Media Calculate the proceeds from assumed exercise of 107,800 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 eTextbook and Media Calculate the after-tax interest paid on the 4% bonds. After-tax interest on 4% bonds converted $ eTextbook and MediaDetermine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive Incremental Incremental security Numerator Effect 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 $ eTextbook and MediaDetermine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive Incremental Incremental security Numerator Effect Denominator Effect EPS 6% Bonds $ $ eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 4% Bonds 6% Bonds $0.72 Preferred shares Options eTextbook and MediaCalculate diluted earnings per share for 2020. (Round earnings per share to 2 decimal places, e.g. 15.25.) Numerator Denominator EPS Basic $ Sub Total Sub Total V Sub Total $ $ Diluted EPS
