The following information was taken from the books and records of Cullumber, Inc.:1. Net Income $391,4002. Capital structure: a. Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 290,000 b. $10 par common stock, 190,000 shares issued and outstanding during the entire year. 1,900,000 c. Stock warrants outstanding to buy 15,040 shares of common stock at $20 per share. 3. Other information: a. Bonds converted during the year None b. Income tax rate 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year $32 e. Warrants were outstanding the entire year f. Warrants exercised during the year Compute diluted earnings per share

Earnings Per Share (EPS): Here, NI means Net Income, NoS is Total No. of Shares in Common Stock.…

Answered: The following information was taken…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following information was taken from the books and records of Cullumber, Inc.:

1.	Net Income	$391,400
2.	Capital structure:
	a.	Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years.	290,000
	b.	$10 par common stock, 190,000 shares issued and outstanding during the entire year.	1,900,000
	c.	Stock warrants outstanding to buy 15,040 shares of common stock at $20 per share.
3.	Other information:
	a.	Bonds converted during the year	None
	b.	Income tax rate	30%
	c.	Convertible debt was outstanding the entire year
	d.	Average market price per share of common stock during the year	$32
	e.	Warrants were outstanding the entire year
	f.	Warrants exercised during the year

Compute diluted earnings per share

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