Reference no: EM132902593
Question - On January 1, 2020, Rockwood Corporation had 210,000 common shares outstanding. During 2020, it had the following transactions that affected the common share account:
February 1 - Issued 160,000 common shares
March 1 - Issued 55,000 more common shares
April 1 - Issued a 20% stock dividend
May 1 - Repurchased 100,000 common shares and retired them
June 1 - Issued a 2 for 1 stock split
October 1 - Issued 40,000 common shares
The company had the following two convertible securities outstanding:
8% convertible bonds, each $1,000 bond convertible into 15 common shares $300,000
6% convertible $100 par value preferred shares, each convertible to 2 common shares $50,000
Both convertible securities were issued at face value in 2020. The preferred shares are cumulative. No dividends were declared in 2020.
Assume that Rockwood had net income after tax of $1,225,000 during 2020. There was a discontinued loss before tax of $220,000.
The company's year-end is December 31. Assume a tax rate of 35%.
Required -
1. Determine the weighted average number of shares outstanding at December 31, 2020.
2. Calculate basic earnings per share.
3. Calculate the Diluted Earnings per share.