Preparing financial statements for a financial year

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Minal Hair Products, a New York-based corporation is preparing financial statements for its financial year ended June 30, 2010. The equity capital on July 1, 2009 consisted of 1 million shares of common stock outstanding and 20,000 shares of $50 par value, 6%, convertible preferred stock. Each preferred stock was convertible into 20 shares of common stock. There were no preferred dividends in arrears. The debt capital consisted of $900,000 worth of 5%, $1,000 convertible bonds. Each bond was convertible into 50 shares of common stock. Assume a Tax Rate of 40%.

The net income for the financial year ended June 30, 2010 was $200,000.

On October 1, 2009, Minal required some funds for expansion into New Jersey and sold an additional 600,000 shares of the common stock at $20 per share. On April 1, 2010, Minal also had a 10 for 1 stock split of its common shares. These were the only stock transactions that occurred during the financial year.

Required:

For the financial year ended June 30, 2010, determine the:

(a) Basic EPS

(b) Diluted EPS

(Assume that the stock transactions which took place on October 1, 2009 and April 1, 2010 would still have occurred with conversion)

 

Reference no: EM131796293

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