QUestion 2

A

Sheffield Corp. had 205000 shares of common stock, 20300 shares of convertible preferred stock, and $1580000 of 4% convertible bonds outstanding during 2021. The preferred stock is convertible into 39800 shares of common stock. During 2021, Sheffield paid dividends of $1.00 per share on the common stock and $4 per share on the preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for 2021 was $599000 and the income tax rate was 35%. Diluted earnings per share for 2021 is (rounded to the nearest penny)

$2.06.

$2.19.

$2.02.

$2.45.

B:

On June 30, 2021, when Swifty Corporation's stock was selling at $66 per share, its capital accounts were as follows:

Capital stock (par value $50; 65000 shares issued)	$3250000
Premium on capital stock	650000
Retained earnings	4110000

If a 100% stock dividend were declared and distributed, capital stock would be

$6500000.

$8580000.

$3250000.

$3900000.