Reference no: EM132492259

Point 1: On January 1, 2020, BC Corp. had 200,000 common shares outstanding. On April 1, 2020, 20,000 common shares were issued and on September 1, 2020, from the market, BC bought back and cancelled 30,000 common shares. Based on these transactions, weighted average common shares outstanding during the year was 205,000. The market price of the common shares averaged $50 during 2020. The corporation's income tax rate is 40%.

Point 2: During 2020, there were 30,000 call options to buy common shares at $40 a share outstanding; and there were 20,000, $7, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares.

Point 3: During 2019, the corporation had issued $2,000,000 of 8% convertible bonds at face value. Each $1,000 bond is convertible into 20 common shares.

Point 4: The corporation reported $750,000 net income for calendar 2020.

Instructions

Question a) Verify the weighted average common shares outstanding during the year as provided. Show all your calculation.

Question b) Calculate basic earning and various diluted earnings per share for 2020. Provide your answers in a layering format showing all calculations.