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Compute diluted eps on january

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Reference no: EM132601003

On January 1, 2017, Crocker Company issued 10-year, $2,000,000 par value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of common stock. Net income in 2017 was $300,000, and the tax rate was 40%. The company had 100,000 shares of common stock outstanding throughout the year.

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Question (a) Compute diluted EPS for 2017.

Question (b) Compute diluted EPS for 2017, assuming the same facts as above, except that $1,000,000 of 6% noncumulative, convertible preferred stock was issued instead of the bonds. Each $100 preferred stock is convertible into 5 shares of common stock. No dividends were declared.

Reference no: EM132601003

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