Question
The shareholders' equity of Cameron Corp. as of 31 December 20X6, the end of the current fiscal year, is as follows: $1 cumulative preferred shares,
The shareholders' equity of Cameron Corp. as of 31 December 20X6, the end of the current fiscal year, is as follows:
$1 cumulative preferred shares, no-par, convertible at the rate
of 5-for-1; 265,000 shares outstanding $9,167,000
Common shares, no-par; 1,800,000 shares outstanding 16,700,000
Common stock conversion rights 248,000
Retained earnings 30,770,000
Additional information:
- On 1 July 20X6, 184,000 preferred shares were converted to common shares at the rate of 5-for-1.
- During 20X6, Cameron had convertible subordinated debentures outstanding with a face value of $4,170,000. The debentures are due in 20X2, at which time they may be converted to common shares or repaid at the option of the holder. The conversion rate is 15 common shares for each $100 debenture. Interest expense of $192,000 was recorded in 20X6.
- The convertible preferred shares had been issued in 20X0. Quarterly dividends, on 31 March, 30 June, 30 September, and 31 December, have been regularly declared.
- The company's 20X6 net earnings were $2,323,000, after tax at 35%. Common shares traded for an average price of $35, stable in each quarter of the year.
- Cameron had certain employee stock options outstanding all year. The options were to purchase 430,000 common shares at a price of $31 per share. The options become exercisable in 20X3.
- Cameron had another 117,000 employee stock options outstanding on 1 January 20X6, at an exercise price of $39. They expired on 30 June 20X6.
Required:
1. Calculate the basic EPS.(Do not round intermediate calculations.Round your answer to 2 decimal places.)
2. Calculate the Individual effects forpreferred shares (converted), preferred shares, (unconverted) and debentures.(Do not round intermediate calculations. Round your answersto 2 decimal places.)
3. Calculate the Diluted EPS.(Do not round intermediate calculations. Round your answer to 2 decimal places.)
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