Conversion Corporation had the following accounts as of December 31, 2018: 7% convertible bonds payable into...

 

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Conversion Corporation had the following accounts as of December 31, 2018: 7% convertible bonds payable into 60 common shares for each $1,000 bond outstanding for the full year, issued at par, interest paid annually. 5% convertible bonds payable into 25 common shares for each $1,000 bond issued on March 31, 2018 issued at par, interest paid annually. 70,000 $1.50 cumulative preferred shares outstanding convertible into 50,000 common shares outstanding for the full year. $5,000,000 $8,000,000 b. Calculate Diluted EPS for 2018. Test and calculate diluted EPS ensuring all calculations are provided. Other relevant information: Net earnings for the year were $1,317,500. Common shares outstanding are 500,000 with no changes to common share ownership in 2018. No bonds or shares were converted in 2018. The tax rate is 25%. The average market share price during the year was $10. $35,000 Required: Calculate and round to whole numbers for shares and for changes to net income. Round to two decimals for EPS. When reviewing the solution, not following the rounding policy will lead to errors. a. Calculate Basic EPS for 2018 c. Present Basic and Diluted EPS as reported on the Income Statement. Conversion Corporation had the following accounts as of December 31, 2018: 7% convertible bonds payable into 60 common shares for each $1,000 bond outstanding for the full year, issued at par, interest paid annually. 5% convertible bonds payable into 25 common shares for each $1,000 bond issued on March 31, 2018 issued at par, interest paid annually. 70,000 $1.50 cumulative preferred shares outstanding convertible into 50,000 common shares outstanding for the full year. $5,000,000 $8,000,000 b. Calculate Diluted EPS for 2018. Test and calculate diluted EPS ensuring all calculations are provided. Other relevant information: Net earnings for the year were $1,317,500. Common shares outstanding are 500,000 with no changes to common share ownership in 2018. No bonds or shares were converted in 2018. The tax rate is 25%. The average market share price during the year was $10. $35,000 Required: Calculate and round to whole numbers for shares and for changes to net income. Round to two decimals for EPS. When reviewing the solution, not following the rounding policy will lead to errors. a. Calculate Basic EPS for 2018 c. Present Basic and Diluted EPS as reported on the Income Statement.

Answer rating: 100% (QA)

a Basic EPS for 2018 Basic EPS is calculated by dividing the net earnings available to common shareholders by the weighted average number of common sh... View the full answer