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During 2019, Dawson Manufacturing Company had 950,000 shares of common stock outstanding. On June 30, 2019, the company issued 10,000, 7% convertible bonds at par.
During 2019, Dawson Manufacturing Company had 950,000 shares of common stock outstanding. On June 30, 2019, the company issued 10,000, 7% convertible bonds at par. The maturity value of each bond is $1,000. Each bond is convertible into 20 shares of common stock. None were converted during 2019. Dawson also had 60,000 stock warrants outstanding for all of 2019. The option price is $10 per share. The market price of the common stock was $40 on December 31, 2019, and the average market price for 2019 was $30. Dawson reported a net income of $3,650,000 for 2019. Assume the company had a 40 percent income tax rate. (a) Compute the basic earnings per share. (b) Compute diluted earnings per share
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