Tax Rate is 25%. Computing EPS: Convertible DebtShaffer Corporation issued 140, $1,000, 10% convertible bonds in 2019 at face value. Each bond is convertible into 100 shares of common stock. Shaffer's net income for 2020 is$3,100,800 ($4,134,400 before tax). Considering all factors except convertible bonds, average common shares outstanding for 2020 were 1,414,000.• Note: In the following calculations, enter the earnings per share amounts in dollars and cents, rounded to the nearest penny.a. Compute basic EPS.b. Compute diluted EPS.Net Income Available to Weighted Avg. CommonCommon StockholdersShares OutstandingPerShare2.19✓2.18Basic EPS $3,100,800✔1,414,000 S1,428,000 $Diluted EPS $3,111,300c. How do the answers to parts a and b change if the bonds were issued on July 1, 2020?Net Income Available to Weighted Avg. CommonCommon Stockholders Shares OutstandingPerShare1,414,000 $ 2.2✔1,421,000 $ 2.19$Basic EPSDiluted EPS $3,106,0503,111,300d. Ignoring part c, how do the answers to parts a and b change if one-half of the bonds were converted on July 1, 2020?Hint: For this exercise, assume that the net income given needs to be adjusted to reflect six months of interest expense instead of one year of interest expense.PerNet Income Available to Weighted Avg. CommonCommon StockholdersShares OutstandingShare0xBasic EPS $Diluted EPS $1,424,500 x $1,424,500 x S3,111,300✔0xCheck↑

EPS termed as Earnings per share which refers to the monetary value of the earnings per share…

Shaffer Corporation issued 140, $1,000, 10% convertible bonds in 2019 at face value. Each bond is convertible into 100 shares of common stock. Shaffer's net income for 202 $3,100,800 ($4,134,400 before tax). Considering all factors except convertible bonds, average common shares outstanding for 2020 were 1,414,000. Note: In the following calculations, enter the earnings per share amounts in dollars and cents, rounded to the nearest penny. a. Compute basic EPS. b. Compute diluted EPS. Net Income Available to Weighted Avg. Common Common Stockholders Shares Outstanding Per Share 2.19 Basic EPS $ 3,100,800 ✓ 1,414,000$ 1.428,000S Diluted EPS $ 3,111,300 2.18 c. How do the answers to parts a and b change if the bonds were issued on July 1, 2020?

Shaffer Corporation issued 140, $1,000, 10% convertible bonds in 2019 at face value. Each bond is convertible into 100 shares of common stock. Shaffer's net income for 202 $3,100,800 ($4,134,400 before tax). Considering all factors except convertible bonds, average common shares outstanding for 2020 were 1,414,000. Note: In the following calculations, enter the earnings per share amounts in dollars and cents, rounded to the nearest penny. a. Compute basic EPS. b. Compute diluted EPS. Net Income Available to Weighted Avg. Common Common Stockholders Shares Outstanding Per Share 2.19 Basic EPS $ 3,100,800 ✓ 1,414,000$ 1.428,000S Diluted EPS $ 3,111,300 2.18 c. How do the answers to parts a and b change if the bonds were issued on July 1, 2020?

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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