In 2019, Pharoah Ltd. issued $ 42,000 of 8% bonds at par, with each $ 1,000 bond being convertible into 100 common shares. The company had revenues of $ 73,500 and expenses of $ 42,300 for 2020, not including interest and taxes (assume a tax rate of 30%). Throughout 2020, 1,000 common shares were outstanding, and none of the bonds were converted or redeemed. (For simplicity, assume that the convertible bonds equity element is not recorded.)

(a)

Correct answer icon

Your answer is correct.

Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.)

Diluted earnings per share

$ enter Diluted earnings per share in dollars

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Attempts: 1 of 3 used

Using multiple attempts will impact your score.

5% score reduction after attempt 1

(b)

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Your answer is correct.

Assume that the 42 bonds were issued on October 1, 2020 (rather than in 2019), and that none have been converted or redeemed. Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.)

Diluted earnings per share

$ enter Diluted earnings per share in dollars

eTextbook and Media

Attempts: 1 of 3 used

Using multiple attempts will impact your score.

5% score reduction after attempt 1

(c)

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Your answer is incorrect.

Assume the bonds were issued in 2019. Assume that 7 of the 42 bonds were converted on July 1, 2020. Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.)

(3) Diluted EPS

Net Earnings + Diluted Earnings = 21,840 (this will be same as above)

Diluted Shares = 7 x 100 x 6/12 + 35 x 100 = 3,850

Diluted EPS = 21,840/(1,000+3,850) = 4.50

4.50 WAS WRONG

Diluted earnings per share

$ enter Diluted earnings per share in dollars

Your answer is incorrect. Assume the bonds were issued in 2019. Assume that 7 of the 42 bonds were converted on July 1, 2020. Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.) Diluted earnings per share Senter Diluted earnings per share in dollars 4.50 Your answer is incorrect. Assume the bonds were issued in 2019. Assume that 7 of the 42 bonds were converted on July 1, 2020. Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.) Diluted earnings per share Senter Diluted earnings per share in dollars 4.50 In 2019. Pharoah Ltd. issued $ 42,000 of 8% bonds at par, with each $ 1.000 bond being convertible into 100 common shares. The company had revenues of $ 73,500 and expenses of $ 42,300 for 2020, not including interest and taxes (assume a tax rate of 30%). Throughout 2020, 1,000 common shares were outstanding, and none of the bonds were converted or redeemed. (For simplicity, assume that the convertible bonds' equity element is not recorded.) (a) Correct answer icon Your answer is correct Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.) Diluted earnings per share 4.20 Senter Diluted earnings per share in dollars eTextbook and Media Attempts: 1 of 3 used Using multiple attempts will impact your score. 5% score reduction after attempt 1 (b) Correct answer icon Your answer is correct. Assume that the 42 bonds were issued on October 1, 2020 (rather than in 2019), and that none have been converted or redeemed. Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.) Diluted earnings per share Senter Diluted earnings per share in dollars 10.65