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The following information was taken from the books and records of Love Co.: 1. Net income 380,000 2. Capital structure: a. Convertible 7% bonds. Each
The following information was taken from the books and records of Love Co.: 1. Net income 380,000 2. Capital structure: a. Convertible 7% bonds. Each of the 300, 1,000 bonds is convertible into 50 ordinary shares at the present date and for the next 10 years. 300,000 b. 10 par, 250,000 ordinary shares issued and outstanding by June 30. However, on July 1, the company made a stock split 2-for-1 for the ordinary shares. No other transactions were made during the year except for the stock split c. 10 par, 100,000, 7% preferred shares issued and outstanding during the entire year. 1,000,000 d. Share warrants outstanding to buy 17,000 ordinary shares at 20 per share. 3. 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 Compute basic and diluted earnings per share
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