Reference no: EM132727245

On 01-01-19, Smith had 732,000 shares of common stock outstanding. On 08-01-19, Smith issued 72,000 shares of its common stock. Smith's net income for the year ended 12-31-19 was $1,200,000. Smith's income tax rate is 25%. During 2019, Smith declared and paid dividends on its 60,000 shares of its 8%, $100 par value, convertible preferred stock. Each share of the convertible preferred stock can be converted, at the discretion of the stockholder, into 6 shares of Smith's common stock. As of 12-31-19, Smith had $4,000,000 of 4% convertible bonds. Smith issued the bonds at face value during 2012. The bonds can be converted into 600,000 shares of Smith's common stock.

Problem 1: What will Smith report as its diluted earnings per share for the year ended 12-31-19?