Earnings per share: Earnings per share (EPS) indicates the income earned per share of common stock. EPS is calculated as Basic EPS and Diluted EPS. The income for EPS is calculated by subtracting the preference dividends. The income is divided by weighted-average common shares outstanding. This is Basic EPS. Basic EPS does not consider the dilutive effects of convertible long-term debts. Diluted EPS is based on the assumption that for all convertible securities like preference shares , bonds will be exercised. Diluted EPS takes the calculation a step further and is more detailed than the Basic EPS. To compute: To compute diluted earnings per share. Given Information: Net income: $300,000. Common Stock: 100,000. Bonds: 800,000. Rate: 10%. Convertible into: 16,000 shares. Tax rate: 40%.

Question

Want to see the full answer?

Answer 1

Question

Chapter 16, Problem 13BE

To determine

Earnings per share: Earnings per share (EPS) indicates the income earned per share of common stock. EPS is calculated as Basic EPS and Diluted EPS.

The income for EPS is calculated by subtracting the preference dividends. The income is divided by weighted-average common shares outstanding. This is Basic EPS. Basic EPS does not consider the dilutive effects of convertible long-term debts. Diluted EPS is based on the assumption that for all convertible securities like preference shares, bonds will be exercised. Diluted EPS takes the calculation a step further and is more detailed than the Basic EPS.

To compute: To compute diluted earnings per share.

Given Information: Net income: $300,000.

Common Stock: 100,000.

Bonds: 800,000.

Rate: 10%.

Convertible into: 16,000 shares.

Tax rate: 40%.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Donald Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base salary of $1,380 per month. One of the barbers serves as the manager and receives an extra $535 per month. In addition to the base salary, each barber also receives a commission of $3.75 per haircut. Other costs are as follows. Advertising $270 per month Rent $1,010 per month Barber supplies $0.50 per haircut Utilities $160 per month plus $0.15 per haircut Magazines $35 per month Donald currently charges $11.00 per haircut. Compute the break-even point in sales units and in sales dollars. Break-even point Break-even point sales $ haircuts

Carla Vista Company had $212,200 of net income in 2024 when the unit selling price was $151, the unit variable costs were $95, and the fixed costs were $571,800. Management expects per unit data and total fixed costs to remain the same in 2025. The president of Carla Vista Company is under pressure from stockholders to increase net income by $84,000 in 2025. Assume that Carla Vista Company sells the same number of units in 2025 as it did in 2024. What would the unit selling price have to be in order to reach the stockholders' desired net income, assuming the unit variable costs and fixed costs remain at 2024 levels? New unit selling price $

Eric Greenhills, a partner in the CPA firm of XYZ & Co. LLP, audited the financial statements of ABC. Company. The audit report can be signed by Eric Greenhills XYZ & Co., LLP a Yes Yes b No No c Yes No d No Yes is the correct answer c yes ,no or a yes, yes ??