Cumulative convertible preference stock

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Reference no: EM133307205

At December 31, 2019, Kissit Inc. had 400,000 shares of common stock outstanding. The company also had 40,000 shares of $7 cumulative convertible preference stock. Each share is convertible into 4 shares of common stock.

Transactions during 2020:

July 1, 2020

Sold 200,000 shares

July 8, 2020

Declared 100% stock dividend

September 1, 2020

Sold 120,000 shares

October 1, 2020

Purchased 60,000 shares to be retired

Kissit Inc. reported a loss of $670,700 for the year 2020.

1. Compute the basic earnings per share. Show calculations.

2. Conduct the dilution test, compute diluted earnings (loss) per share, and discuss what Kissit Inc. should report for EPS for the year's annual report.

Reference no: EM133307205

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