P) 16-8B

Preferred stock cash dividends-Cash dividends to preferred stockholders were declared and paid as scheduled. Instructions Determine the number of shares used to compute basic earnings per share for the year ended December 31, 2015. Determine the number of shares used to compute diluted earnings per share for the year ended December 31, 2015. Compute the adjusted net income to be used as the numerator in the basic earnings per share calculation for the year ended December 31, 2015. (Computation of Basic and Diluted EPS) The information below pertains to Payson Company for 2015. Net income for the year $8, 670,000 6% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 60 shares of common stock 5,000,000 4% convertible, cumulative preferred stock, $100 par value; each share is convertible into 4 shares of common stock 2, 500,000 Common stock, $1 par value 9, 500,000 Tax rate for 2015 40% Average market price of common stock $18 per share There were no changes during 2015 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 120,000 shares of common stock at $12 per share. Instructions (a) Compute basic earnings per share for 2015. Compute diluted earnings per share for 2015. (EPS with Stock Dividend and Extraordinary Items) Pawner Corporation is preparing the comparative financial statements to be included in the annual report to stockholders. Pawner employs a fiscal year ending October 31. Income from operations before income taxes for Pawner was $, 3, 750000 and $3, 200,000, respectively, for fiscal years ended October 31, 2015 and 2014. Pawner experienced an extraordinary loss of $600,000 because of an earthquake on June 6, 2014. A 40% combined income tax rate pertains to any and all of Pawner Corporation's profits, gains, and losses