Reference no: EM132589272

Sarasota Horizon Corp had the following items, all of which were outstanding throughout the entire fiscal year ending September 30, 2021:

810,000 common shares

320,000 $3 cumulative, no-par value preferred shares

Options to purchase 110,000 common shares at $13 per share. The average market price of Sarasota's common shares during the year was $20 per share. None of the options were exercised or expired during fiscal 2021

9% bond with a face value of $2,000,000, convertible to 49,000 common shares.

Sarasota's net income for fiscal 2021 was $7,197,000, and its tax rate was 15%. Preferred dividends had been paid in all previous fiscal years.

Question 1: Calculate the income effort of the dividends on preferred shares.

Question 2: Calculate Sarasota's basic earnings per share for the year. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately). (Round answer to 2 decimal places, e.g. 15.25.)

Question 3: Calculate the after-tax interest paid on the 9% bonds.

Question 4: Determine an incremental per share effect for 9% bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.)

Question 5: Calculate the proceeds from assumed exercise of options.

Question 6: Calculate the incremental shares oustanding upon the exercise of options.

Question 7: Calculate Sarasota's diluted earnings per share for the year.