Use the same information as in E17-13, except for the changes in part (c). Assume instead that

Question:

Use the same information as in E17-13, except for the changes in part (c). Assume instead that 40% of the convertible bonds were converted to common shares on April 1, 2017.
In E17-13
Mininova is preparing earnings per share data for 2017. The net income for the year ended December 31, 2017 was $400,000 and there were 60,000 common shares outstanding during the entire year. Mininova has the following two convertible securities outstanding:
10% convertible bonds (each $1,000 bond is convertible into 25 common shares) ..... $100,000
5% convertible $100 preferred shares (each share is convertible into two common shares) ................................................................................................ $50,000
Both convertible securities were issued at in 2014. There were no conversions during 2017, and Mininova's income tax rate is 24%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately.
Instructions
(a) Calculate Mininova's weighted average common shares outstanding.
(b) Calculate Mininova's basic earnings per share for 2017.
(c) Calculate Mininova's diluted earnings per share for 2017.
(d) What do you notice about the results of the diluted earnings per share calculation when conversions occur during the year and when they do not occur?
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