Question
n 2020 Our Company had Net Income of $825,000. On 1/1/20, there were 150,000 shares of common stock outstanding. On 4/1/20, we issued 54,000 shares
n 2020 Our Company had Net Income of $825,000. On 1/1/20, there were 150,000 shares of common stock outstanding. On 4/1/20, we issued 54,000 shares of common stock. On 6/1/20, we issued 36,000 shares of $100 par value, 6% cumulative preferred stock. This preferred stock is convertible into 72,000 shares of common stock. On 9/1/20, we issued $9,000,000 of 4% bonds at par. These bonds are convertible into 72,000 shares of common stock. The marginal tax rate is 25%. In addition, there are 135,000 options outstanding at 12/31/20. Each option entitles the holder to exchange it for 1 share of common stock at an exercise price of $20 per share. The average market price for common stock for 2020 was $50. Please be sure to show your calculations so that you can earn partial credit.
How much is Basic Earnings Per Share? _______________________
How much is Diluted Earnings Per Share? _____________________
Show your calculations!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started