Computing Diluted EPS: Convertible Bonds and Convertible Preferred StockJones Corporation's capital structure follows.December 312020 Outstanding shares of stock Common stock, outstanding shares275,000 Convertible preferred stock, outstanding shares25,000 8% Convertible bonds$2,500,000 During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 50,000 shares of common stock. The 8% bonds are convertible into 75,000 shares of common stock. Net income for 2020 is $1,870,000. Assume that the income tax rate is 25%.Requireda. Compute basic EPS for 2020.b. Compute diluted EPS for 2020.Note: Round earnings per share amounts to two decimal places. Net Income Available toCommon StockholdersWeighted Avg. CommonShares OutstandingPerShareBasic EPSAnswerAnswerAnswerDiluted EPSAnswerAnswerAnswer Computing Diluted EPS: Convertible Bonds and Convertible Preferred StockJones Corporation's capital structure follows.December 312020Outstanding shares of stockCommon stock, outstanding shares275,000Convertible preferred stock, outstanding shares25,0008% Convertible bonds$2,500,000During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 50,000 shares of common stock. The 8% bonds are convertible into 75,000 shares ofcommon stock. Net income for 2020 is $1,870,000. Assume that the income tax rate is 25%.Requireda. Compute basic EPS for 2020.b. Compute diluted EPS for 2020.Note: Round earnings per share amounts to two decimal places.Net Income Available to Weighted Avg. CommonShares OutstandingPerCommon StockholdersShareBasic EPS2$2$Diluted EPS $

Given that net income $1870000 Dividend declared and paid = $3 per share tax = 25%

Answered: Computing Diluted EPS: Convertible…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

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Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock

Jones Corporation's capital structure follows.

December 31	2020
Outstanding shares of stock
Common stock, outstanding shares	275,000
Convertible preferred stock, outstanding shares	25,000
8% Convertible bonds	$2,500,000

During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 50,000 shares of common stock. The 8% bonds are convertible into 75,000 shares of common stock. Net income for 2020 is $1,870,000. Assume that the income tax rate is 25%.

Required

a. Compute basic EPS for 2020.

b. Compute diluted EPS for 2020.

Note: Round earnings per share amounts to two decimal places.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
Basic EPS	Answer	Answer	Answer
Diluted EPS	Answer	Answer	Answer

Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock
Jones Corporation's capital structure follows.
December 31
2020
Outstanding shares of stock
Common stock, outstanding shares
275,000
Convertible preferred stock, outstanding shares
25,000
8% Convertible bonds
$2,500,000
During 2020, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 50,000 shares of common stock. The 8% bonds are convertible into 75,000 shares of
common stock. Net income for 2020 is $1,870,000. Assume that the income tax rate is 25%.
Required
a. Compute basic EPS for 2020.
b. Compute diluted EPS for 2020.
Note: Round earnings per share amounts to two decimal places.
Net Income Available to Weighted Avg. Common
Shares Outstanding
Per
Common Stockholders
Share
Basic EPS
2$
2$
Diluted EPS $

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