NOTE: In all three parts, for Basic EPS purposes, the weighted average number of common shares outstanding was 136,000.

(1) A partial income statement for a company for the year 2022 is presented below:

Income before interest and taxes $600,000

Interest expense (100,000)

Income before income taxes $500,000

Income tax expense (110,000)

Net income $390,000

The $100,000 interest relates to convertible bonds, $1,000,000 par, 10% interest.

Each $1,000 bond is convertible into 25 common shares. The bonds were issued in 2020. Bondholders have the option to convert the bonds starting in 2025.

1. Compute the basic EPS for 2022
2. Compute the diluted EPS for 2022

Part (2). Assume that the bonds in Part (1) are NOT convertible.

The company had Convertible, cumulative preferred stock. These shares were issued on July 1, 2021 and each $100 par share is entitled to a 5% dividend. There are 10,000 shares outstanding and each share is convertible into five shares of common stock. NO dividends were paid in 2021. In July of 2022, the company paid both the 2021 and 2022 preferred dividends.

1. Compute the basic EPS for 2022
2. Compute the diluted EPS for 2022

Part (3) Assume that the company has both bond and preferred stock (as described above), but they are NOT convertible.

On April 1, 2022, the company granted options for 60,000 shares of common stock, exercisable in 2024. The exercise price is $20 and the average market price for the last nine months of 2022 was $25.

REQUIRED:

Compute Diluted EPS for the year 2022 assuming the same Basic EPS you computed in Part (2)

In excel please