Computing EPS: Convertible DebtShaffer Corporation issued 100, $1,000, 10% convertible bonds in 2019 at face value. Each bond is convertible into 100 shares of common stock. Shaffer's net income for 2020 is $1,824,000 ($2,432,000 before tax). Considering all factors except convertible bonds, average common shares outstanding for 2020 were 1,010,000.Note: In the following calculations, round earnings per share amounts to two decimal places. d. Ignoring part c, how do the answers to parts a and b change if one-half of the bonds were converted on July 1, 2020?Hint: For this exercise, assume that the net income given needs to be adjusted to reflect six months of interest expense instead of one year of interest expense. Net Income Available toCommon StockholdersWeighted Avg. CommonShares OutstandingPerShareBasic EPS Diluted EPS

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Answered: Basic EPS Diluted EPS

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Computing EPS: Convertible Debt

Shaffer Corporation issued 100, $1,000, 10% convertible bonds in 2019 at face value. Each bond is convertible into 100 shares of common stock. Shaffer's net income for 2020 is $1,824,000 ($2,432,000 before tax). Considering all factors except convertible bonds, average common shares outstanding for 2020 were 1,010,000.

Note: In the following calculations, round earnings per share amounts to two decimal places.

d. Ignoring part c, how do the answers to parts a and b change if one-half of the bonds were converted on July 1, 2020?Hint: For this exercise, assume that the net income given needs to be adjusted to reflect six months of interest expense instead of one year of interest expense.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
Basic EPS
Diluted EPS

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