Reference no: EM132578199
On January 1, 2018 Basic Corporation had 600,000 common shares outstanding and 25,000 $.50 cumulative convertible preferred shares outstanding. Dividends are in arrears for three years.
On February 1, 2018 the company issued 380,000 common shares. On March 1, 2018 the company issued a 2 for 1 stock split. On June 1, 2018, the company repurchased and retired 120,000 common shares Income from continuing operations was $2,700,000 and the company recorded a discontinued operations loss of 260,000.
Required:
Question 1: Calculate Basic EPS (show all calculations) and present as required for the Statement of Comprehensive income.
Diluted EPS
Conversion Corporation had the following accounts as of December 31, 2018:
1. 7% convertible bonds payable into 60 common shares for each $1,000 bond outstanding for the full year, issued at par, interest paid annually.
2. 5% convertible bonds payable into 25 common shares for each $1,000 bond issued on March 31, 2018 issued at par, interest paid annually.
3. 70,000 $1.50 cumulative preferred shares outstanding convertible into 50,000 common shares outstanding for the full year.
4. 40,000 options outstanding to purchase 120,000 common shares for $3 a share, outstanding for the full year.
Other relevant information:
- Net earnings for the year were $1,317,500. Common shares outstanding are 500,000 with no changes to common share ownership in 2018.
- No bonds or shares were converted in 2018 and no options were exercised.
- The tax rate is 25%.
- The average market share price during the year was $10.
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