Convertible preferred stock : 2,250 shares 0f 8.0%, $50 par preferred stock were
ID: 2502101 • Letter: C
Question
Convertible preferred stock : 2,250 shares 0f 8.0%, $50 par preferred stock were issued on January 2, 2010, for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. current dividends have been declared and paid. To date, no preferred stock has been converted.
2. Convertible bonds : bonds with a face value of $ 225,000 and interest rate at 6.0% were issued at par in 2012. Each $1,000 bond is convertible into 25 shares of common stock. To date, no bonds have been converted.
Francis earned net income of $ 75,000 during 2013. The income tax rate is 30 %
Required :
1. Calculate basic EPS for 2013. If required, round your answer to the
2a. Assume the same facts as above except that net income included a loss from discounted operations of $ 12,900 net of income taxes. compute basis EPS. You do not have to calculate diluted EPS for this case. If required round your answer to the nearest cent.
2b. show how the basic EPS you calculated should be reported to the shareholders. you do not have to calculate diluted EPS.
Explanation / Answer
Ans 1 - EPS = [(75000 x 0.7) - (2250 x 50 x 0.08) - (225000 x 0.06)] / Number of common stock shares
Ans 2a - EPS = [((75000 - 12900) x 0.7) - (2250 x 50 x 0.08) - (225000 x 0.06)] / Number of common stock shares
Ans 2b - The basic EPS is reported on the income statement.