Compute diluted earnings per share

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Question - On January 1, 2014, Crocker Company issued 10-year, 3,330,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 18 shares of Crocker common stock. Crocker's net income in 2014 was $257,000, and its tax rate was 45%. The company had 103,000 shares of common stock outstanding throughout 2014. None of the bonds were converted in 2014.

(a) Compute diluted earnings per share for 2014.

(b) Compute diluted earnings per share for 2014, assuming the same facts as above, except that $1,030,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 10 shares of Crocker common stock.

Reference no: EM132079973

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