Question
On January 1 2020, Teal Company issued 10-year $1,860,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 16 shares of Teal
On January 1 2020, Teal Company issued 10-year $1,860,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 16 shares of Teal Common stock. Teal's net income in 2020 was $412,800 and its tax rate was 20%. The company had $96,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. a) Compute diluted earnings per share for 2020. Round answer to 2 decimal places. b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Teal common stock. Round answer to 2 decimal places.
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