Question
Gorilla Glue Company reported Net Income of $15,900 for 2017.Assuming a tax rate of 30% and the following detail regarding their capital structure, calculate both
Gorilla Glue Company reported Net Income of $15,900 for 2017.Assuming a tax rate of 30% and the following detail regarding their capital structure, calculate both Basic & Diluted EPS for 2017.
1.6,000 shares of common stock were outstanding for the entire year. The average stock price was $30 per share.
2.Options to purchase 800 shares of common stock at $20 per share were outstanding the entire year.
3.7.5%, $100 par convertible preferred stock:$16,000 outstanding (issued at par), were outstanding the entire year. Each share of convertible preferred stock can be converted into common stock at a price of $20.
4.9.0%, $100 par convertible preferred stock:$10,000 outstanding for the entire year. Each share can be converted into 4 shares of common stock.
5.6% convertible bonds:$30,000 outstanding for the entire year (the bonds were originally issued for $32,000, a price that yielded 5.375%).Bond interest expense of $1,720 was recorded in 2017; premium of $80 is being amortized each year.Each $1,000 bond is convertible into 19 shares of common.
6.9.2% convertible bonds: $25,000 outstanding for the entire year. The bonds were issued at $23,750, a price that yielded 9.68% at issuance.
The original issue discount is being accreted into income at the rate of $50 per year. Each $1,000 bond is convertible into 45 shares of common stock.
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