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The Marilyn Company had 20.000 shares of common stock outstanding beginning 2016. Marilyn is sued 6.000 additional common shares at the beginning of April. They
The Marilyn Company had 20.000 shares of common stock outstanding beginning 2016. Marilyn is sued 6.000 additional common shares at the beginning of April. They also had 2.500 shares of 6% 5100 par preferred stock that was issued in 2012 for $110 per share. Each share of preferredis convertible into five shares of common. The $5 per share common and the anmaal preferred dividends have been declared and paid for the current year. At the end of December 2016, Marilyn also had outstanding $300,000 in 8% ten- year convertible debertures that were sold at 90 in 2012. Each bondis convertible into fifteen shares of common and any discounts orpremiums are amortized using the straight-line method. In addition, Marilyn has outstanding at the end of the fiscal year options to purchase 5,000 shares of common stockat $10 per share. In 2016, the average price of the common stock was $25 and the ending price was $35. The company's 2016 net income is $100,000 and its tax rate is 40%. Compute basic and diluted EPS for Marilyn in 2016 according to GAAP. Basic EPS Calculation: Dilutive Effect of the Preferred Stock: Dilutive Effect ofthe Options: Dilutive Effect of the Convertible Bonds: Diluted EPS Calculation: (Show how each dilutive security affects the EPS ratio)
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