Chapter 19, Problem 19.14P

EPS; convertible preferred stock; convertible bonds; order of entry

• LO19–7, LO19–9, LO19–10

Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2018:

Common shares outstanding throughout the year	100 million
Convertible preferred shares (convertible into 32 million shares of common)	60 million
Convertible 10% bonds (convertible into 13.5 million shares of common)	$900 million

Henderson-Niles’s net income for the year ended December 31, 2018, is $520 million. The income tax rate is 40%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2018.

Required:

Compute basic and diluted earnings per share for the year ended December 31, 2018.