Computing Basic and Diluted EPS, Convertible Bonds Issued during the Year, Preferred Stock. Use the same information in E20-4 except now assume that the company issued $ 10,000,000, 2.5% convertible bonds on June 30 (i. e., $ 250,000 coupon interest annually), which are convertible into 325,000 shares of common stock. Based on this information, compute basic and diluted earnings per share for the current year. .
In E20-4
Stewart Stamping began the cur-rent year with 400,000 common shares outstanding and issued an additional 150,000 shares on September 1. The firm has $ 10,000,000, 2.5% convertible bonds outstanding for a full year (i. e., $ 250,000 coupon interest per year), which are convertible into 325,000 shares of common stock. The firm issued the bonds at par and did not convert any during the current year. It also had $ 1,150,000 par value, 3% nonconvertible, noncumulative preferred stock outstanding for the full year and declared dividends for the current year. The company is subject to a 40% effective tax rate and net income is $ 3,500,000. Based on this information, compute basic and diluted earnings per share for the current year. .