Question regarding the earnings per share

Reference no: EM13259299

Tryonce Corp. had $ 1,000,000 net income in 2011. On January1, 2011, there were 240,000 shares of common stock outstanding.

a. There are 40,000 options to buy common stock at $ 30 a share outstanding. The market price of the common stock averaged $ 39/share during 2011.

b. During all of 2011, there were 20,000 shares of convertible preferred stock outstanding. The preferred is $ 100 par, pays $ 7.50 a year dividend, and is convertible into four shares of common stock.

c. The company issued $ 2, 200,000 of 8% convertible bonds at face value July 1, 2011. Each $ 1,000 bond is convertible into 22 shares of common stock. Assume a 40% tax rate.

Required:

1. Compute the Basic Earnings per share. Show all calculations

2. Compute the diluted Earnings per share.

Reference no: EM13259299

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