Reference no: EM132593531
Question - Riggs Corporation has the following balance sheet information at December 31, 2016.
Current liabilities $800,000
Convertible bonds ($1,000 par, 5%) 2,000,000
Common stock ($1 par, 300,000 shares issued 300,000 Additional paid-in capital 2,100,000
Retained earnings 3,230,000
Treasury stock (43,000 shares) (1,161,000)
Total liabilities and shareholders' equity $7,269,000
The convertible bonds were issued at par in 2014 and are convertible into Riggs's common stock at a ratio of 15 shares of stock to 1 bond. In its December 31, 2016 annual report, Riggs reported 125,000 exercisable qualified stock options. Each option allows the holder to acquire one share of common stock for $19 per share. All of the options were outstanding at the end of 2017. On October 1, 2017, Riggs purchased 32,000 shares of treasury stock for $50 per share. The average market price of the common stock during 2017 was $50 per share, and the December 31, 2017, price was $56. Riggs's net income for the year ended December 31, 2017, was $825,000, and its tax rate was 35%.
Required -
1. Compute Riggs's basic EPS for the year ended December 31, 2017.
2. Compute Riggs's diluted EPS for the year ended December 31, 2017. There are no antidilutive securities.
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