On January 1, 2017, Culver Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Culver common stock. Culver's net income in 2017 was $322,000, and its tax rate was 40%. The company had 108,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e. g. $2.55.) Diluted earnings per share $

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Wilson Merritt

Business

2 September, 17:52

On January 1, 2017, Culver Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Culver common stock. Culver's net income in 2017 was $322,000, and its tax rate was 40%. The company had 108,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e. g. $2.55.) Diluted earnings per share $

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Emmy Day · Answer 1

Diluted earnings per share is $2,33

Explanation:

Diluted earnings per share = (The company's net income - dividends on preferred stock) / (outstanding shares of common + Diluted shares)

Diluted shares is the share could be converted from any convertible bond = ($2,010,000/$1,000) * 15 = 30,150

= ($322,000 - 0) / (108,000+30,150) = $2.33