Reference no: EM132589548

Following is information taken from Sheffield Inc.'s December 31, 2021 balance sheet:

5% bonds payable, $5,970,000maturing December 31, 2022,

each $1,000 bond convertible into18common shares$5,970,000

8% bonds payable, $5,240,000, maturing December 31, 2023,

each $1,000 bond convertible into 30 common shares at any time up to December 31, 2023 $5,240,000

Cumulative preferred shares, $5, no-par value, convertible at

1 preferred share for 4 common shares,49,600 shares outstanding $992,000

Common shares, no par-value,2,954,000 shares outstanding

Sheffield's net income for 2021 was $8,693,600, and the company was subject to an income tax rate of 20%. Both classes of bonds were outstanding the entire year, as were the preferred shares. The weighted-average number of common shares outstanding during the period was 3,519,000. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately).

Question 1: Calculate the income effect of the dividends on preferred shares.

Question 2: Calculate Sheffield's basic EPS for 2021.

Question 3: Calculate the after-tax interest paid on the 5% bonds.

Question 4: Determine an incremental per share effect for 5% bonds.

Question 5: Calculate the after-tax interest paid on the 8% bonds.

Question 6: Determine an incremental per share effect for 8% bonds.

Question 7: Determine an incremental per share effect for $5 preferred shares.

Question 8: Rank the potentially dilutive securities from most dilutive to least dilutive.

Question 9: Calculate Sheffield's diluted EPS for 2021.