Compute diluted earnings per share

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Problem

(EPS with Convertible Bonds, Various Situations) At the beginning of 2014, Florida Rock Industries had 25,000 shares of common stock issued and outstanding and 500 $1,000, 6% bonds, each convertible into 10 shares of common stock. During 2014, Florida Rock had revenues of $156,500 and expenses other than interest and taxes of $104,000. Assume that the tax rate is 40%. None of the bonds was converted or redeemed.

Instructions:

(a) Compute diluted earnings per share for 2014.

(b) Assume the same facts as those assumed for part (a), except that the 500 bonds were issued on September 1, 2014 (rather than in a prior year), and none have been converted or redeemed.

(c) Assume the same facts as assumed for part (a), except that 100 of the 500 bonds were actually converted on July 1, 2014.

Reference no: EM131795611

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