On January 1, 2020, Sarasota Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Sarasota common stock. Sarasota's net income in 2020 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, eg. $2.55.) Diluted earnings per share $ (b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Sarasota common stock. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $
On January 1, 2020, Sarasota Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Sarasota common stock. Sarasota's net income in 2020 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, eg. $2.55.) Diluted earnings per share $ (b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Sarasota common stock. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 26E: Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of...
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![On January 1, 2020, Sarasota Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Sarasota common stock.
Sarasota's net income in 2020 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2020. None of the bonds
were converted in 2020.
(a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)
Diluted earnings per share $
(b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds.
Each $100 preferred share is convertible into 5 shares of Sarasota common stock. (Round answer to 2 decimal places, e.g. $2.55.)
Diluted earnings per share $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31f6f4ed-4398-445e-924f-07caf6bcb308%2Ffb7ff4d8-8027-4d03-8683-bdf4f89d0b76%2F4q4lmy_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2020, Sarasota Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Sarasota common stock.
Sarasota's net income in 2020 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2020. None of the bonds
were converted in 2020.
(a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)
Diluted earnings per share $
(b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds.
Each $100 preferred share is convertible into 5 shares of Sarasota common stock. (Round answer to 2 decimal places, e.g. $2.55.)
Diluted earnings per share $
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