Reference no: EM133161121
Question - The following data are presented by Quartz Corp. for calendar 2022
Net income $2,250,000
Common shares outstanding, 1,000,000 shares
10%, cumulative preferred shares, convertible into 100,000 common shares $1,600,000
6% convertible bonds; convertible into 110,000 common shares $6,000,000
360,000 call options exercisable at $20 per share
Additional information
1. The common and preferred shares and the convertible bonds were outstanding from the beginning of the year.
2. In 2022, a $ 500,000 dividend was declared and distributed; however, no dividends were declared in 2021.
3. The average market price of the common shares in 2022 was $ 25. The stock price was $22 on January 1, 2022, and $30 on December 31, 2022.
4. The convertible bonds were sold at par.
5. The income tax rate for 2022 is 30%.
Required -
1. Calculate basic Earnings Per Share.
2. Calculate diluted Earnings Per Share. As part of this requirement show the incremental EPS for each item followed by a presentation of most to least dilutive.