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Compute both basic and diluted earnings per share

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The Sarasota Corporation issued 10-year, $4,960,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 15:1, and in 2 years it will increase to 18:1. At the date of issue, the bonds were sold at 99. Bond discount is amortized on a straight-line basis. Sarasota's effective tax was 40%. Net income in 2017 was $9,450,000, and the company had 1,975,000 shares outstanding during the entire year.

Compute both basic and diluted earnings per share.

Reference no: EM132409693

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