Question:

Below we present Nickel Incorporated's current-year partial income statement. Nickel is subject to a 30% income tax rate.

Partial Income Statement	Current Year
Income from continuing operations	$1,250,390
Discontinued operations-income, net of tax	$537,660
Net Income	$1,788,050

A partial balance sheet for the current year follows.

Partial Balance Sheet	Current Year
Liabilities:
5% Convertible Debt - issued at $1,000 par value (1)	$8,117,000
Stockholders Equity:
Common Stock, no par (1,036,000 shares issued and outstanding) (2)	$5,220,000
$3 Convertible Preferred Stock, $100 par value (42,600 shares issued and outstanding) (3)	4,260,000
Deferred compensation (employee options to acquire 253,125 shares)	(1,902,500)

Footnotes to the Balance Sheet:

1.) Each bond is convertible into 81 shares of common stock. The bonds are outstanding all year.

2.) The number of shares issued and outstanding did not change throughout the year.

3.) Each preferred share is convertible into 9 shares of common stock. The firm declared preferred dividends. The preferred stock was outstanding all year

4.) The options are exercisable at $14 per share and the average market price of the company's stock for the year is $35. The options were outstanding all year.

Answer:

Requirements:

a.) Based on the information provided, compute basic and diluted earnings per share (EPS) for the current year. Include all computations related to the application of antidilution sequencing, if needed.

Begin by calculating the incremental income per share on each of the potentially dilutive securities and ranking their order of entry into the EPS computation. (Complete all answer boxes. Enter a "0" for any zero balances. Round the increase in income amounts to the nearest dollar. Round the incremental income per share amounts to the nearest cent, $X.XX.)

Complete the table below to calculate the basic and diluted EPS on income from continuing operations and to identify whether each security is dilutive or antidilutive. (Complete all answer boxes. Enter a "0" for any zero balances. Round all per share amounts to the nearest cent, $X.XX. Abbreviationused: ops. = operations.)

Calculate the basic earnings per share for net income. (Round the EPS to the nearest cent, $X.XX.)

Basic EPS from net income for the current year is $______

Calculate the diluted earnings per share for net income. (Round the EPS to the nearest cent, $X.XX.)

Diluted EPS from net income for the current year is $______

b.) Prepare the income statement disclosures required beginning with income from continuing operations.(Complete all answer boxes. Round all EPS amounts to the nearest cent, $X.XX.)

* = _______ / _______ shares

** = ______ / _______ shares