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Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares. On the date of acquisition, the fair value of

Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares. On the date of acquisition, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soothing Company. Summary balance sheets for the companies on December 31, 20X8, are as follows:

Pain

Corporation

Soothing

Company

Cash and Receivables

$

80,000

$

70,000

Inventory

40,000

30,000

Buildings and Equipment (net)

160,000

150,000

Investment in Soothing Company

135,000

0

Total Assets

$

415,000

$

250,000

Accounts Payable

50,000

$

25,000

Preferred Stock ($10 par value)

50,000

75,000

Common Stock ($5 par value)

100,000

50,000

Retained Earnings

215,000

100,000

Total Liabilities and Owners' Equity

$

415,000

$

250,000

Pain's preferred pays a 8 percent annual dividend, and Soothing's preferred pays a 10 percent dividend. Soothing's preferred shares can be converted into 20,000 shares of common stock at any time. Soothing reported net income of $35,000 and paid a total of $10,000 of dividends in 20X8. Pain reported income from its separate operations of $80,000 and paid total dividends of $25,000 in 20X8.

52) Based on the information provided, what is the diluted earnings per share for the consolidated entity for 20X8?

A) $4.53

B) $4.33

C) $4.00

D) $3.80

Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares. On the date of acquisition, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soothing Company. Summary balance sheets for the companies on December 31, 20X8, are as follows:

Pain

Corporation

Soothing

Company

Cash and Receivables

$

80,000

$

70,000

Inventory

40,000

30,000

Buildings and Equipment (net)

160,000

150,000

Investment in Soothing Company

135,000

0

Total Assets

$

415,000

$

250,000

Accounts Payable

50,000

$

25,000

Preferred Stock ($10 par value)

50,000

75,000

Common Stock ($5 par value)

100,000

50,000

Retained Earnings

215,000

100,000

Total Liabilities and Owners' Equity

$

415,000

$

250,000

Pain's preferred pays a 8 percent annual dividend, and Soothing's preferred pays a 10 percent dividend. Soothing's preferred shares can be converted into 20,000 shares of common stock at any time. Soothing reported net income of $35,000 and paid a total of $10,000 of dividends in 20X8. Pain reported income from its separate operations of $80,000 and paid total dividends of $25,000 in 20X8.

52) Based on the information provided, what is the diluted earnings per share for the consolidated entity for 20X8?

A) $4.53

B) $4.33

C) $4.00

D) $3.80

Can you please explain to me how the answer is $4.33 using math steps

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