Reference no: EM132461409

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

1. 720,000 common shares
2. 330,000 $3 cumulative, no-par value preferred shares
3. Options to purchase 90,000 common shares at $13 per share. The average market price of Blossom's common shares during the year was $20 per share. None of the options were exercised or expired during fiscal 2021
4. 9% bond with a face value of $1,800,000, convertible to 47,000 common shares.

Blossom's net income for fiscal 2021 was $8,118,000, and its tax rate was 15%. Preferred dividends had been paid in all previous fiscal years.

Question 1) Calculate the income effect of the dividends on preferred shares. Dividends on preferred shares $=?

Question 2) Calculate Blossom's basic earnings per share for the year. Basic earnings per share=?

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

Question 4) Determine an incremental per share effect for 9% bonds. Incremental Numerator Effect=?

Incremental Denominator Effect=?

EPS=?

Question 5) Calculate the proceeds from assumed exercise of options. Proceeds from exercise of options=$?

1. Calculate the incremental shares outstanding upon the exercise of options.The incremental shares outstanding upon the exercise of options =?

Question 6) Rank the potentially dilutive securities from most dilutive to least dilutive.

9% bond (rank 1/ rank 2/ anti-dilutive)

options (rank 1/ rank 2/ anti-dilutive)

Question 7) Calculate Blossom's diluted earnings per share for the year.