The company reported net income of $430,000 for the year and 120,000 shares of common stock were
Question:
The company reported net income of $430,000 for the year and 120,000 shares of common stock were outstanding during the year. The income tax rate is 30%. 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 20,000 shares of common stock. The option exercise price is $10 per share. The ending stock price for the year was $8.
(b) 5,000 convertible preferred shares (cumulative, 5%, $100 par). Each preferred share is convertible into four shares of common stock.
(c) 1,000 convertible bonds ($1,000 face value, 10%). Each bond is convertible into 22 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 5000 shares 100 par 005 25000 Basic EPS 430000 25000120000 shares 338 per share 2 Determination of whether each potentially dilu...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
