Leprechan Inc. had the following stock and convertible securities outstanding on January 1:720,000 shares of $2 par common stock• 13,000 shares of 6% $80 par cumulative convertible preferred stock• Stock options for the purchase of 90,000 common shares at $25 per shareThe following stock transactions occurred during the year:• March 1: purchased 60,000 treasury shares with cash• June 1: stock split (2:1)• November 1: issued an additional 240,000 shares of common stock for cashThe preferred stock is convertible into 200,000 shares of common stock (after adjustment for the stocksplit.) The average price of the common stock during the year was $30 per share. None of the securitieswere converted during the year.Net income was $2,500,000, and the company's tax rate is 40%.Required: Calculate basic earnings per share:Calculate fully diluted earnings per share:

Basic EPS = (Net income-preferred stock dividend)/common shares Diluted EPS =(Net income)/(common…

Answered: Calculate basic earnings per share:…

Business

Accounting

Calculate basic earnings per share: Calculate fully diluted earnings per share:

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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Leprechan Inc. had the following stock and convertible securities outstanding on January 1:
720,000 shares of $2 par common stock
• 13,000 shares of 6% $80 par cumulative convertible preferred stock
• Stock options for the purchase of 90,000 common shares at $25 per share
The following stock transactions occurred during the year:
• March 1: purchased 60,000 treasury shares with cash
• June 1: stock split (2:1)
• November 1: issued an additional 240,000 shares of common stock for cash
The preferred stock is convertible into 200,000 shares of common stock (after adjustment for the stock
split.) The average price of the common stock during the year was $30 per share. None of the securities
were converted during the year.
Net income was $2,500,000, and the company's tax rate is 40%.
Required: Calculate basic earnings per share:
Calculate fully diluted earnings per share:

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