$25$

$f_x$

A

B

C

D

E

earned

possible

cell

general

$1$

$9$

C$25$

$0$

Tlps: This spreadsneet contalins macros wnich will provide realtume leeaback on EACH cell In the olue snaded area. Tour score on the assignment will be calculated based upon the percentage of the $9$ cells that are completed correctly. Use cell referencing where you can and work in order $($i$.$e$.$ start with required #$1).$

The information below pertains to Hood Company for $2026.$

Net income for the year

B$\%$ convertible bonds issued at par $($ $$1,000$ per bond$)$; each bond is convertible into $60$ shares of common stock

$$9,500,000$

$5\%$ corvertible, cumulative preferred stock, $$100$ par value, each share is corvertible into $4$ shares of common stock

Shares of common stock outstanding, $$1$ par value

Tax rate for $2026$

$$4,930,000$

Average market price of common stock, per share

$$2,450,000$

$9,760,000$

$20\%$

$20$

There were no changes during the year in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options $($granted in a prior year$)$ to purchase the following shares of common stock:

# shares available for purchase via stock options

$120,000$

price of common stock $($per share$)$

$$12$

Formulas and Methodologies:

Basic Earnings Per Share $=($Net income $-$ Preferred Dividends Paid$)/$ Weighted average # of common shares outstanding

Incremental Shares for stock warrants via Treasury Method $=[($market price $-$ exercise price$)/$ market price$]*$ # shares

Diluted Earnings Per Share: First examine stock warrants, then remaining dilutive securities; rank in order of dilution and do not include if anti$-$dilutive

Required $-$ Calculate the following:

$1$ Preferred dividends paid

$2$ Basic earnings per share

$3$ Are they $"$in the money" for exercising $($i$.$e$.$ is exercise price $$ market price$)?$ Answer Yes or No by linking to cells on the right.

$4$ Incremental shares issued for stock options

$5$ Incremental shares issued for convertible bonds

$6$ Interest savings for convertible bonds $($inclusive of tax effect$)$

$\backslash$table$[[$ket price$)?$ Answer Yes or No by linking to cells on the right. Yes$],[$ct$)],[$Yare$)]]$

$7$ EPS effect of convertible bonds $(\frac{\text{\$}}{?}$ share$)$

$8$ EPS effect of convertible, cumulative preferred stock $(\frac{\text{\$}}{?}$ share$)$

$9$ Final diluted earnings per share