Corporation C earned net income of $250,000 during 19A. It also had 20,000 shares of common...

   

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Corporation C earned net income of $250,000 during 19A. It also had 20,000 shares of common stock and 5,000 shares of $100 par, 6% preferred stock outstanding during the year. No dividends were declared this year. Determine basic EPS if: (a) the preferred stock is cumulative. (b) the preferred stock is noncumulative. Corporation D earned net income of $70,000 during 19A and had an average of 10,000 shares of common stock outstanding. It also had a $50,000, 8% bond payable convertible into 2,000 shares of common stock. There is no preferred stock outstanding. Determine basic EPS and diluted EPS. Assume a 2% tax rate. Corporation C earned net income of $250,000 during 19A. It also had 20,000 shares of common stock and 5,000 shares of $100 par, 6% preferred stock outstanding during the year. No dividends were declared this year. Determine basic EPS if: (a) the preferred stock is cumulative. (b) the preferred stock is noncumulative. Corporation D earned net income of $70,000 during 19A and had an average of 10,000 shares of common stock outstanding. It also had a $50,000, 8% bond payable convertible into 2,000 shares of common stock. There is no preferred stock outstanding. Determine basic EPS and diluted EPS. Assume a 2% tax rate.

Answer rating: 100% (QA)

Solution Answer 1 a If the preferred stock is cumulative the earnings available to common stockholders will be reduced by the amount of preferred divi... View the full answer