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14 June, 13:37

Bonita Industries had 205000 shares of common stock, 19100 shares of convertible preferred stock, and $1496000 of 5% convertible bonds outstanding during 2021. The preferred stock is convertible into 39000 shares of common stock. During 2021, Bonita paid dividends of $0.90 per share on the common stock and $4 per share on the preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for 2021 was $592000 and the income tax rate was 30%.

What is the basic earnings per share for 2011 is (rounded to the nearest cent)

a. $2.94.

b. $3.22.

c. $3.35.

d. $3.60.

What is the diluted earnings per share for 2011 is (rounded to the nearest cent)

a. $2.77.

b. $2.81.

c. $3.05.

d. $3.33.

+2
Answers (1)
  1. 14 June, 14:04
    0
    EPS is $2.8 per share

    Diluted EPS is $2.4 per share

    Explanation:

    Basic Earning per share is calculated dividing Earning for the year excluding preferred dividend by weighted average number of shares.

    Basic EPS = (Net Income - Preferred dividends) / Weighted Average numbers of share

    Basic EPS = ($592,000 - (19,100 x $0.9) / 205,000 = $2.8 per share

    Diluted earning per share is calculated by adjusting all the convertible share options or securities in the outstanding share.

    Diluted EPS = (Net Income - Preferred dividends) / Diluted numbers of share

    Diluted EPS = ($592,000 - $17,190) / (205,000 + 39,000)

    Diluted EPS = $2.4 per share

    All the option given are inconsistent with data given.
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