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How to solve diluted earnings per share and basic earnings

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Reference no: EM132583903

The following data relate to XYZ Ltd. for the calendar year 2019:

Net income (30% tax rate)............................................................... $3,250,000

Average number of common shares

outstanding during 2019.............................................................. 1,200,000 shares

8%, cumulative convertible preferred shares:

convertible into 90,000 common shares................................... $1,800,000

6% convertible bonds; convertible into 60,000

common shares......................................................................... $2,000,000

Stock options, exercisable at $30 per share......................................... 105,000 shares

All the convertible securities and stock options were outstanding all year. The average market price of the common shares in 2019 was $35.

Instructions

Question 1: Calculate:

a. basic earnings per share

b. diluted earnings per share

Reference no: EM132583903

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