Compute basic and diluted earnings per share

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Question - The information below pertains to Ivanhoe Company for 2021.

Net income for the year $1,230,000 8% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 2,090,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 3,830,000 Common stock, $10 par value 6,110,000 Tax rate for 2021 20% Average market price of common stock $25 per share.

There were no changes during 2021 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 80,600 shares of common stock at $20 per share.

Required -

(a) Compute basic earnings per share for 2021.

(b) Compute diluted earnings per share for 2021.

Reference no: EM132723589

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