Compute basic earnings per share for the current year

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Question - Stewey Stumping began the current year with 300,000 common shares outstanding and issued an additional 100,000 shares on August 1. The firm has $8,000,000, 3.5% convertible bonds outstanding for a full year, which are convertible into 310,000 shares of common stock. The firm issued the bonds at par and did not convert any during the current year. It also had $1,050,000 par value, 3% nonconvertible, noncumulative preferred stock outstanding for the full year and declared dividends for the current year. The company is subject to a 35% effective tax rate, and net income is $3,000,000.

Required -

A. Based on this information, compute basic earnings per share for the current year.

B. Based on this information, compute the diluted earnings per share for the current year.

Reference no: EM133160950

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