Exercise 16-23

On June 1, 2015, Flint Company and Buffalo Company merged to form Carla Inc. A total of830,000shares were issued to complete the merger. The new corporation reports on a calendar-year basis.

On April 1, 2017, the company issued an additional643,000shares of stock for cash. All1,473,000shares were outstanding on December 31, 2017.

Carla Inc. also issued $600,000of 20-year,8% convertible bonds at par on July 1, 2017. Each $1,000bond converts to42shares of common at any interest date. None of the bonds have been converted to date.

Carla Inc. is preparing its annual report for the fiscal year ending December 31, 2017. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,555,000. (The tax rate is40%.)

Determine the following for 2017.

(a)The number of shares to be used for calculating:(Round answers to 0 decimal places, e.g. $2,500.)

(1)Basic earnings per share

shares(2)Diluted earnings per share

shares

(b)The earnings figures to be used for calculating:(Round answers to 0 decimal places, e.g. $2,500.)

(1)Basic earnings per share$

(2)Diluted earnings per share$