Reference no: EM132886223
Question - The controller at NorthEast Industries, a public company, is preparing the calculation for basic and diluted earnings per share and the related disclosure for NorthEast's financial statements. The following is selected financial information for the fiscal year end December 31, 2020.
Long term debt
Notes payable, 6% $ 1,440,000
7% convertible bonds 7,200,000
9% bonds payable 5,760,000
Total long term debt $14,400,000
Shareholder's Equity
Preferred shares, convertible, $6,00 cumulative,
200,000 Shares authorized, 36,000 shares issued
And Outstanding $1,800,000
Common shares, unlimited authorized, 720,000 shares issued and Outstanding 6,840,000
Contributed surplus conversion rights 360,000
Retained earnings 6,120,000
Total shareholders' equity $15,120,000
The following transactions occurred at NorthEast:
1. Options were granted by the company to purchase 36,000 common shares at $14 per share. No options have been exercised and the average price of the common shares in 2016 was $21.
2. The convertible, cumulative $6.00 preferred shares were issued in 2018 and are convertible into two common shares.
3. The bonds were issued at face value. The 7% convertible bonds will convert into common shares at 48 shares per $1,000 bond.
4. There are no preferred dividends in arrears, and preferred dividends were not declared in 2020.
5. The following common share transactions occurred during the year.
Jan 1 609,200 shares outstanding
May 1 Issued 72,000 common shares
June 30 Issued a 5% stock dividend
September30 Acquired 21, 600 common shares
November 1 Issued 26,340 common shares
6. Net income for fiscal year 2020 was $1,512,000 and the average income tax rate was 25%.
Required - Calculate basic and diluted earnings per share. Please present basic earnings per share in table format. Please rank your calculations for diluted earnings per share and present earnings per share in table format from most to least dilutive.