Lola Inc. must compute EPS for its 2020 reports. The following information is available to the controller. • Net income is $30 million (before tax it is $50 million). • Common stock (20 million shares authorized; 15 million shares outstanding January 1, 2020). • Cumulative convertible preferred stock (2 million shares issued August 1, 2017, and outstanding January 1, 2020). The stock was issued at $50 a share with a yearly $4 dividend declared and paid semiannually on June 30 and December 31. The stock is convertible on a share-for-share basis adjusted automatically for any stock dividends or splits. Dividends are paid for time stock is held. • March 1, 2020: Half of the preferred stock was converted to common stock. • April 1, 2020: Lola declared a 10% stock dividend. • July 1, 2020: One million shares of stock were issued in the
Lola Inc. must compute EPS for its 2020 reports. The following information is available to the controller. • Net income is $30 million (before tax it is $50 million). • Common stock (20 million shares authorized; 15 million shares outstanding January 1, 2020). • Cumulative convertible preferred stock (2 million shares issued August 1, 2017, and outstanding January 1, 2020). The stock was issued at $50 a share with a yearly $4 dividend declared and paid semiannually on June 30 and December 31. The stock is convertible on a share-for-share basis adjusted automatically for any stock dividends or splits. Dividends are paid for time stock is held. • March 1, 2020: Half of the preferred stock was converted to common stock. • April 1, 2020: Lola declared a 10% stock dividend. • July 1, 2020: One million shares of stock were issued in the acquisition of Grande Corporation. The stock’s fair value at this time was $15 a share. • October 1, 2020: Lola purchased and retired 600,000 shares of its common stock for $700,000. • All preferred dividends were declared and paid.
4. Compute diluted EPS.
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