Question
PROBLEM 2. The following information was taken from the books and records of Legg, Inc.: - Net Income = $480,000 - Capital structure : A.
PROBLEM 2. The following information was taken from the books and records of Legg, Inc.:
- Net Income = $480,000
- Capital structure:
A. Convertible 6% bonds. Each of the 300, $1,000 bonds is convertible
into 50 shares of common stock at the present date and for the next
10 years. = $300,000
B. $10 par common stock, 200,000 shares issued and outstanding
during the entire year. = $2,000,000
C. Stock warrants outstanding to buy 16,000 shares of common stock
at $20 per share.
- Other information:
A. Bonds converted during the year = NONE
B. Income tax rate = 30%
C. Convertible debt was outstanding the entire year
D. Average market price per share of common stock during the year = $32
E. Warrants were outstanding the entire year
F. Warrants exercised during the year = NONE
Instructions
1. Compute basic and diluted earnings per share.
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