Kollins Kids, Ltd. began the current year with 320,000 common shares outstanding and issued an additional 120,000

Question:

Kollins Kids, Ltd. began the current year with 320,000 common shares outstanding and issued an additional 120,000 shares on August 1. The firm has $ 8,000,000, 5% convertible bonds outstanding at the beginning of the year (i. e., $ 400,000 interest per year), which are convertible into 180,000 shares of common stock. The firm issued the bonds at their and converted them on April 1. Kollins Kids also has $ 920,000 4% convertible, noncumulative preferred stock outstanding. The preferred shares can convert into 10,000 shares of and were outstanding for a full year. The firm declared dividends for the current year. There were no actual conversions of the preferred stock during the year. Kollins is subject to a 40% effective tax rate and net income is $ 2,800,000. Assume all convertible securities are dilutive.
Required
a. Based on this information, compute basic and diluted earnings per share for the current year.
b. Prepare the earnings per share disclosure on the income statement beginning with net income. Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...