In 2012 XYZ Enterprises issued, at par, 300, $1,000, 10% bonds, each convertible into 100 shares of common stock. XYZ had revenues of $170,000 and expenses other than interest and taxes of $80,000 for 2018. (Assume that the tax rate is 40%.) Throughout 2018, 15,000 shares of common stock were outstanding; none of the bonds was converted or redeemed. XYZ's Net Income is calculated as follows: Revenues $170,000 - Expenses $80,000 - Bond Interest Expense $30,000 (300 x 1,000 x 10%) = Income before taxes: $60,000 - Income Tax Expense (40%) $20,000 = Net Income: $40,000 11) Calculate the basic earnings per share for 2018: 12)Calculate the diluted earnings per share for 2018:
In 2012 XYZ Enterprises issued, at par, 300, $1,000, 10% bonds, each convertible into 100 shares of common stock. XYZ had revenues of $170,000 and expenses other than interest and taxes of $80,000 for 2018. (Assume that the tax rate is 40%.) Throughout 2018, 15,000 shares of common stock were outstanding; none of the bonds was converted or redeemed. XYZ's Net Income is calculated as follows: Revenues $170,000 - Expenses $80,000 - Bond Interest Expense $30,000 (300 x 1,000 x 10%) = Income before taxes: $60,000 - Income Tax Expense (40%) $20,000 = Net Income: $40,000 11) Calculate the basic earnings per share for 2018: 12)Calculate the diluted earnings per share for 2018:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In 2012 XYZ Enterprises issued, at par, 300, $1,000, 10% bonds, each convertible into 100 shares of
common stock. XYZ had revenues of $170,000 and expenses other than interest and taxes of $80,000 for
2018. (Assume that the tax rate is 40%.) Throughout 2018, 15,000 shares of common stock were
outstanding; none of the bonds was converted or redeemed. XYZ's Net Income is calculated as follows:
Revenues $170,000 - Expenses $80,000 Bond Interest Expense $30,000 (300 x 1,000 x 10%) = Income
before taxes: $60,000 - Income Tax Expense (40%) $20,000 = Net Income: $40,000
11) Calculate the basic earnings per share for 2018:
12)Calculate the diluted earnings per share for 2018:
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