Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions