Reference no: EM132582576

Blossom Inc. had 506,000 common shares outstanding for the entire fiscal year ended August 31, 2020. Blossom has 110,000 outstanding $2 cumulative, no-par value preferred shares. All shares were outstanding for the full year. Options were written at the start of the fiscal year to purchase 32,000 common shares at $17 per share. The average market price of Blossom's common shares during the year ended August 31, 2020 was $25 per share. The options expire in 2029, and none were actually exercised during the current year.

Also outstanding for the entire year was a 8% bond with a face value of $6,160,000, convertible to 145,600 common shares. Blossom Inc.'s net income for the year was $2,699,400, and the income tax rate for the fiscal year was 40%.

Question 1. Calculate the income effect of the dividends on preferred shares.

Question 2. Calculate Blossom Inc.'s basic earnings per share for the year ended August 31, 2020.

Question 3. Calculate the after-tax interest paid on the 8% bonds.

Question 4. Determine an incremental per share effect for 8% bonds.

Question 5. Calculate the proceeds from assumed exercise of 32,000 options.

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

Question 7. Calculate the Diluted EPS