Question
Harris Pilton has 150,000 shares of common stock outstanding on January 1. On February 1, the company issued 50,000 additional shares for $50.00 each. On
Harris Pilton has 150,000 shares of common stock outstanding on January 1. On February 1, the company issued 50,000 additional shares for $50.00 each. On April 30, the company repurchased 5,000 treasury shares. On June 1, the company made a 4-for-3 bonus issue. On August 1, the company issued 1,000 new shares of common stock for $45.00 each. On September 30th, the company issued a 15% stock dividend. Harris Pilton has 2,000 shares of 5%, $10 par, noncumulative, nonconvertible preferred stock. Dividends were declared for the period. Harris Pilton also has in issue $100,000 of 7% convertible bonds due in 5 years. Each bond has a $1,000 par value and each $1,000 bond is convertible into 5 shares of common stock. Net income for the period is $540,000. The tax rate is 11%.
Instructions
- Compute the weighted average number of common shares outstanding.
- Compute basic earnings per share for the period.
- Compute diluted earnings per share for the period.
- If the nonconvertible preferred stock were instead convertible, briefly explain how this would have affected diluted earnings per share.
- If the noncumulative preferred stock were cumulative, briefly explain how this would have affected diluted earnings per share.
Computations:
Weighted average number of common shares:
Basic EPS:
Diluted EPS:
Requirement 4:
Requirement 5:
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