The company reported net income of $300,000 for the year and 100,000 shares of common stock were
Question:
The company reported net income of $300,000 for the year and 100,000 shares of common stock were outstanding during the year. The income tax rate is 40%. The company has the following potentially dilutive securities. Assume that each of the securities was issued on or before January 1. Compute
(1) Basic EPS and
(2) Diluted EPS.
(a) Stock options that allow employees to purchase 30,000 shares of common stock. The option exercise price is $10 per share. The ending stock price for the year was $18.
(b) 10,000 convertible preferred shares (cumulative, 5%, $100 par). Each preferred share is convertible into four shares of common stock.
(c) 500 convertible bonds ($1,000 face value, 10%). Each bond is convertible into 40 shares of common stock.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
1 Preferred dividends 10000 shares 100 par 005 50000 Basic EPS 300000 50000100000 shares 250 per share 2 Determination of whether each potentially dil...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
