Francis Company has 20,000 shares of common stock out-standing during all of 2019. It also has two convertible securities outstanding at the end of 2019. These are:
Francis earned net income of $61,500 during 2019. Its income tax rate is 30%.
Required:
Compute the 2019 diluted earnings per share. What earnings per share amount(s) would Francis report on its 2019 income statement?
Calculate the diluted earnings per share and also identify the earnings per share amount that Company F must report in its 2019 income statement.
Earnings per share (EPS):
The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).
Calculate the diluted earnings per share.
(Figure 1)
Working notes:
(1) Calculate the numerator for the basic earnings per share:
(2) Calculate the number of shares increased in common shares:
(3) Calculate the amount of earnings on bond interest expense savings:
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