Question
NEVERMIND, I UNDERSTAND, PLEASE DISREGARD QUESTION, plus the table isn't showing up, how do you delete this post? In 2016, Kingbird Enterprises issued, at par,
NEVERMIND, I UNDERSTAND, PLEASE DISREGARD QUESTION, plus the table isn't showing up, how do you delete this post?
In 2016, Kingbird Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Kingbird had revenues of $17,100 and expenses other than interest and taxes of $10,000 for 2017. (Assume that the tax rate is 40%.) Throughout 2017, 1,600 shares of common stock were outstanding; none of the bonds was converted or redeemed.
(a) Compute diluted earnings per share for 2017.
(c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2017. Compute diluted earnings per share for 2017
Revenue: 17,100
Expenses:
The work and answer are already here. What I would like to know is, why 6,000 shares are being added to the number of shares outstanding for part c (when calculating diluted EPS) ? Why is not 40 bonds (not converted) times 100 (for the denominator)?
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