Exercise 10-15 (Algo) Effect of Convertible Bonds on Earnings per Share LO 10-4 Poppy Corporation owns 60 percent of Seed Companys common shares. Balance sheet data for the companies on December 31, 20X2, are as follows: Poppy Corporation Seed Company Assets Cash $ 88,000 $ 32,000 Accounts Receivable 88,000 53,000 Inventory 120,000 100,000 Buildings and Equipment 660,000 94,000 Less: Accumulated Depreciation (210,000) (72,000) Investment in Seed Company Stock 132,000 Total Assets $ 878,000 $ 497,000 Liabilities and Owners Equity Accounts Payable $ 128,000 $ 77,000 Bonds Payable 250,000 200,000 Common Stock ($10 par value) 300,000 100,000 Retained Earnings 200,000 120,000 Total Liabilities and Owners Equity $ 878,000 $ 497,000 The bonds of Poppy Corporation and Seed Company pay annual interest of 8 percent and 10 percent, respectively. Poppys bonds are not convertible. Seeds bonds can be converted into 10,000 shares of its company stock any time after January 1, 20X1. An income tax rate of 40 percent is applicable to both companies. Seed reports net income of $35,000 for 20X2 and pays dividends of $17,000. Poppy reports income from its separate operations of $54,000 and pays dividends of $29,000. Required: Compute basic and diluted EPS for the consolidated entity for 20X2. Note: Round your answers to 2 decimal places