Question
TheNovakCorporation issued 10-year, $4,390,000par,8% callable convertible subordinated debentures on January 2, 2020. The bonds have a par value of $1,000, with interest payable annually. The
TheNovakCorporation issued 10-year, $4,390,000par,8% callable convertible subordinated debentures on January 2, 2020. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is14:1, and in 2 years it will increase to19:1. At the date of issue, the bonds were sold at99. Bond discount is amortized on a straight-line basis.Novak's effective tax was20%. Net income in 2020 was $9,500,000, and the company had1,970,000shares outstanding during the entire year.
Compute both basic and diluted earnings per share.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started