Computing Diluted EPS: Convertible Bonds and Convertible Preferred Stock

Jones Corporation's capital structure follows.

December 31
Outstanding shares of stock
Common stock, outstanding shares	66,000
Convertible preferred stock, outstanding shares	6,000
8% Convertible bonds	$600,000

During the year, Jones declared and paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible in 12,000 shares of common stock. The 8% bonds are convertible into 18,000 shares of common stock. Net income for the year is $425,000. Assume that the income tax rate is 25%.

Required

a. Compute basic EPS.

b. Compute diluted EPS.

• Note: Enter the earnings per share amounts in dollars and cents, rounded to the nearest penny.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
Basic EPS
Diluted EPS