Solution-Compute diluted earnings per share

Compute diluted earnings per share

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Reference no: EM133135588

Question - On January 1, 2020, Teal Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Teal common stock. Teal's net income in 2020 was $391,300, and its tax rate was 20%. The company had 91,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020.

Required -

(a) Compute diluted earnings per share for 2020.

(b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $910,000 of 6% convertible preferred tock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Teal common stock.

Reference no: EM133135588

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Compute diluted earnings per share

Reference no: EM133135588

Reference no: EM133135588

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