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Determine the number of shares to be used basic earnings

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Reference no: EM132993350

On June 1, 2018, Bonita Company and Windsor Company merged to form Sheridan Inc. A total of 826,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis.

  • On April 1, 2020, the company issued an additional 653,000 shares of stock for cash. All 1,479,000 shares were outstanding on December 31, 2020.
  • Sheridan Inc. also issued $ 600,000 of 20-year, 9% convertible bonds at par on July 1, 2020. Each $ 1,000 bond converts to 38 shares of common at any interest date. None of the bonds have been converted to date.
  • Sheridan Inc. is preparing its annual report for the fiscal year ending December 31, 2020. The annual report will show earnings per share figures based upon a reported after-tax net income of $ 1,407,000. (The tax rate is 20%.)

Problem i: Determine the following for 2020.

(a) The number of shares to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.)

(1) Basic earnings per shareenter a number of shares rounded to 0 decimal places
shares

(2) Diluted earnings per shareenter a number of shares rounded to 0 decimal places
shares

Reference no: EM132993350

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