Caldwell Company has 20,000 shares of common stock outstanding during all of 2007. It also has two

Question:

Caldwell Company has 20,000 shares of common stock outstanding during all of 2007. It also has two convertible securities outstanding at the end of 2007. These are:

1. Convertible preferred stock: 2,000 shares of 9.5%, $50 par, preferred stock were issued on January 2, 2007 for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared. To date, no preferred stock has been converted.

2. Convertible bonds: Bonds with a face value of $200,000 and an interest rate of 5.7% were issued at par in 2006. Each $1,000 bond is convertible into 22 shares of common stock. To date, no bonds have been converted.

The company earned net income of $61,500 during 2007. Its income tax rate is 30%.

Required

Compute the 2007 diluted earnings per share. What earnings per share amount(s) would Caldwell report on its 2007 income statement?

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... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...