ABC Corporation has 200,000 common shares outstanding, 20,000 exchangeable preferred shares and $ 1,000,000 in 10% exchangeable bonds outstanding during 2020. Preferred shares are exchangeable for 40,000 common shares. During 2020 ABC paid dividends of $ .90 per share to common shareholders and $ 3.00 per share to preferred shareholders. Each bond is redeemable in 45 common shares. The bonds have an even value of $ 1,000. ABC reported a net income of $ 600,000 and paid a 30% tax rate.   Required: Determine basic earnings per share for 2020   a. $2.42. b. $2.21. c. $2.70. d. $2.51.

Question

ABC Corporation has 200,000 common shares outstanding, 20,000 exchangeable preferred shares and $ 1,000,000 in 10% exchangeable bonds outstanding during 2020. Preferred shares are exchangeable for 40,000 common shares. During 2020 ABC paid dividends of $ .90 per share to common shareholders and $ 3.00 per share to preferred shareholders. Each bond is redeemable in 45 common shares. The bonds have an even value of $ 1,000. ABC reported a net income of $ 600,000 and paid a 30% tax rate.  

Required: Determine basic earnings per share for 2020

 

a. $2.42.
b. $2.21.
c. $2.70.
d. $2.51.

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