Green Thumb, Inc. had 18,000 shares of common stock outstanding on January 1. An additional 6,000 shares were issued on May 1. The company also had 1,000 shares of 5.5%, $100 par, convertible preferred stock outstanding during the year. Each share is convertible into 8 shares of common stock. Net income for the year was $82,500. Required: Compute the appropriate earnings per share amount(s) that would appear on the Green Thumb's income statement. If required, round your answers to two decimal places. Basic earnings per share ________ Diluted earnings per share

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Green Thumb, Inc. had 18,000 shares of common stock outstanding on January 1. An additional 6,000 shares were issued on May 1. The company also had 1,000 shares of 5.5%, $100 par, convertible preferred stock outstanding during the year. Each share is convertible into 8 shares of common stock. Net income for the year was $82,500.

Required:
Compute the appropriate earnings per share amount(s) that would appear on the Green Thumb's income statement. If required, round your answers to two decimal places.

Basic earnings per share ________
Diluted earnings per share ________
Expert Solution
Working:

Annual Dividend to Preferred shareholders = No. of preferred share outstanding x Par value per share x rate of dividend

= 1000 shares x $100 x 5.5%

= $5,500

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