If Al Salam Firm has preferred stocks with dividends of $4,000 and the common shares outstanding were 3,000. The company has a debt of convertible bonds that worth $7,000 at 7% interest, the debt is convertible into 7,000 shares and the Tax Rate is 40%. The Net Income of Al Salam Firm is $16,800 in 2018. Required: Calculate the Basic EPS and the Diluted EPS for Al Salam Firm for the year 2018. Compare the Basic EPS with the Diluted EPS.
If Al Salam Firm has preferred stocks with dividends of $4,000 and the common shares outstanding were 3,000. The company has a debt of convertible bonds that worth $7,000 at 7% interest, the debt is convertible into 7,000 shares and the Tax Rate is 40%. The Net Income of Al Salam Firm is $16,800 in 2018. Required: Calculate the Basic EPS and the Diluted EPS for Al Salam Firm for the year 2018. Compare the Basic EPS with the Diluted EPS.
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
Problem 26E: Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of...
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If Al Salam Firm has
Required:
- Calculate the Basic EPS and the Diluted EPS for Al Salam Firm for the year 2018.
- Compare the Basic EPS with the Diluted EPS.
Expert Solution
Step 1
Given Information:
Preferred dividend is $4000
Outstanding shares is 3000
Debt of convertible bonds is $7000
Interest rate on bonds is 7%
Tax rate is 40%
Net income is 16,800
Step 2
Formula used:
Step 3
Calculations:
(a)
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