The following information was taken from the books and records of Wildhorse, Inc.:1. Net Income $488,4002. 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, 220,000 shares issued and outstanding during the entire year. 2,200,000 c. Stock warrants outstanding to buy 15,520 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 None Compute diluted earnings per share. (Round answers to 2 decimal places, e.g. 52.75.)SecurityEPSCommon Stock2.22Warrants9700Conversion Bonds2.05Click if you would like to Show Work for this question: Open Show Work

Diluted earning per share for convertible bond = After tax interest cost /weighed average potential…

Answered: Common Stock 2.22 Warrants 9700…

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 Wildhorse, Inc.:

1.	Net Income	$488,400
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, 220,000 shares issued and outstanding during the entire year.	2,200,000
	c.	Stock warrants outstanding to buy 15,520 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	None

Compute diluted earnings per share. (Round answers to 2 decimal places, e.g. 52.75.)
Security
EPS
Common Stock
2.22
Warrants
9700
Conversion Bonds
2.05
Click if you would like to Show Work for this question: Open Show Work

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