Reference no: EM133036505

Question - Blackburn Wolff Corp. (BWC) is preparing earnings per share data for 2016. Net income for the year ended December 31, 2016 was $430,000.

BWC had $500,000 of 4% convertible bonds outstanding throughout the year. The bonds were issued at par, and are convertible into 25 common shares in exchange for each $1,000 bond.

The company had 1260,000 common shares outstanding at January 1, 2016. On May 31, 48,000 shares were issued in each for a piece of land. There were no other changes to the common shares during 2016. 124,000 warrants were outstanding throughout the year that allow the holders to purchase shares at a price of $80 each.

BWC's shares were trading at an average of $96/share during the year. The applicable tax rate is 25%.

Required -

(a) Calculate basic earnings per share.

(b) Calculate diluted earnings per share.

(c) Now, assume that BWC's $430,000 of net income included an after tax loss from discontinued operations of $50,000. Show a partial income statement, in good form, that shows only the relevant EPS figures. [Calculate and label each EPS figure. No need to show net income or any other part of the income statement.]