Reference no: EM132856301
Question - Amy Dyken, controller at Wildhorse Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Wildhorse's financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.
Wildhorse Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020
Long-term debt Notes payable, 10% $980,000
8% convertible bonds payable 4,940,000
10% bonds payable 6,050,000
Total long-term debt $11,970,000
Shareholders' equity Preferred stock, 6% cumulative, $50 par value, 108,000 shares authorized, 27,000 shares issued and outstanding $1,350,000
Common stock, $1 par, 9,900,000 shares authorized, 990,000 shares issued and outstanding 990,000
Additional paid-in capital 3,990,000
Retained earnings 6,090,000
Total shareholders' equity $12,420,000
The following transactions have also occurred at Wildhorse.
1. Options were granted on July 1, 2019, to purchase 200,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share.
2. Each bond was issued at face value. The 8% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.
3. The preferred stock was issued in 2019.
4. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.
5. The 990,000 shares of common stock were outstanding for the entire 2020 fiscal year
6. Net income for fiscal year 2020 was $1,520,000, and the average income tax rate is 20%.
For the fiscal year ended June 30, 2020, calculate the following for Wildhorse Pharmaceutical Industries.
(a) Basic earnings per share.
(b) Diluted earnings per share.