question archive Vaughn Manufacturing had 194000 shares of common stock, 20200 shares of convertible preferred stock, and $1504000 of 5% convertible bonds outstanding during 2021
Vaughn Manufacturing had 194000 shares of common stock, 20200 shares of convertible preferred stock, and $1504000 of 5% convertible bonds outstanding during 2021
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Vaughn Manufacturing had 194000 shares of common stock, 20200 shares of convertible preferred stock, and $1504000 of 5% convertible bonds outstanding during 2021. The preferred stock is convertible into 40300 shares of common stock. During 2021, Vaughn paid dividends of $0.90 per share on the common stock and $2 per share on the preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for 2021 was $610000 and the income tax rate was 30%. Basic earnings per share for 2021 is (rounded to the nearest penny)
O $2.60.
O $2.30.
O $2.94.
O $2.52.
Concord Corporation had 201000 shares of common stock, 19100 shares of convertible preferred stock, and $597000 of 10% convertible bonds outstanding during 2021. The preferred stock is convertible into 40100 shares of common stock. During 2021, Concord paid dividends of $0.56 per share on the common stock and $1.70 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2021 was $355000 and the income tax rate was 35%. Diluted earnings per share for 2021 is (rounded to the nearest penny)
O $1.37.
O $1.55.
O $1.47.
O $1.33.
Concord Corporation had 201000 shares of common stock, 19100 shares of convertible preferred stock, and $597000 of 10% convertible bonds outstanding during 2021. The preferred stock is convertible into 40100 shares of common stock. During 2021, Concord paid dividends of $0.56 per share on the common stock and $1.70 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2021 was $355000 and the income tax rate was 35%. Diluted earnings per share for 2021 is (rounded to the nearest penny)
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Answer:
Req 1)
Option C is correct.
Explanation:-
Net income = 610,000
Dividend paid to preferred stock = (40,400) [20,200shares ×2 per share]
Net income = 569,600
Number of Common shares = 194,000
Basic EPS = $2.94 (569,600/194,000)
Req 2)
Option C is correct
Explanation:-
Interest expense of bond = 59,700 (597,000×10%)
After tax cost of interest = interest (1-tax rate)
= 59,700(1-0.35)
= $38,805
Each $1000 bond can be converted in to 45 Common stock.
Total Common shares = 26,865 shares (597000×45/1000)
Converted Preferred stock = 40,100 shares
Common shares already outstanding = 201,000 shares
Total Common shares = 267,965 Common shares
Diluted EPS = (Net income + savings in interest after tax)/total Num of shares
= 355,000 + 38,805/267,965 shares
= $1.47 shares
